DEATH OF A MEMBER

Mr. Speaker: I regret to have to report to the House the death of Mrs. Gwyneth Dunwoody, Member for Crewe and Nantwich. I am sure that hon. Members in all parts of the House will join me in mourning the loss of a colleague and in extending our sympathy to the hon. Member's family and friends.

Hon. Members: Hear, hear.

Oral Answers to Questions

HOME DEPARTMENT

The Secretary of State was asked—

Illegal Firearms

Tony Lloyd: What plans she has to reduce the availability of illegal firearms in inner-city areas.

Jacqui Smith: Mr. Speaker, I associate myself—and, I am sure, all Members of the House—with your comments. My hon. Friend the Member for Crewe and Nantwich was an inspiring and powerful parliamentarian. Parliament, her constituents and her family, with whom our thoughts are at this time, will miss her very much.
	In September 2007, I set up the tackling gangs action programme to develop multi-agency action in inner-city areas of London, Manchester, Birmingham and Liverpool. The £1.5 million programme included a day of action, which resulted in 124 arrests and the seizure of 10 real and more than 1,000 imitation firearms. We will build on the work of that programme and continue to work with partners to reduce further the supply of firearms.

Tony Lloyd: I associate myself, Mr. Speaker, with your observations and those of the Home Secretary about the loss of our friend Gwyneth Dunwoody.
	I thank the Home Secretary personally for her strong commitment to the agenda on guns and gangs; there is no doubt that what she is trying to do is making a real difference. However, although it is vital that we consider technical solutions for taking the gun physically out of circulation when that is possible, in the end the only way to resolve and drive against the problem of guns in our inner cities is by changing hearts and minds and the culture that says that the gun is acceptable. That means working with young people and finding them beneficial activities that they want to do and that the rest of society wants them to be involved in.

Jacqui Smith: I met my hon. Friend and representatives of community organisations and the police in his constituency, and that demonstrated to me what a difference can be made on the issue when the community stands by the police. When I visited his constituency, I was particularly pleased to see the work done by local police officers in Plymouth Grove primary school, for example. They were getting in early, alongside teachers, and not only talking to children and young people about the dangers of guns, but giving them the strength to resist some of the pressures, from their peers and others, that might well have led them into trouble later in life. I wholeheartedly agree with my hon. Friend. What he has mentioned has been an important part of the programme.

Patrick Cormack: I also associate myself with the Home Secretary's remarks about the late Gwyneth Dunwoody. She was indeed a remarkable parliamentarian who will be much missed and long remembered.
	I revert to the question. If the day of action was so splendidly successful, can we not have at least a week of action?

Jacqui Smith: The day of action is part of an ongoing programme of work in which police forces, particularly in areas that face the most gun crime, are involved all the time. It was followed up in some areas by a week of action and in others by a month of action. That work certainly focuses activity, and it will continue.

Ann Cryer: A number of employees of the House have mentioned to me their sadness at the loss of my hon. Friend the Member for Crewe and Nantwich, and I should like to pass those messages on.
	I am pleased by my right hon. Friend's response to the first question. Shortly after we were elected in 1997, a lot of people from Dunblane, whose children had been killed, came to sit in the Gallery. We were promised, among other things, that there would be a national register of people who held handguns. How far have we gone down that road?

Jacqui Smith: My hon. Friend is right that we have strengthened our legislation in a whole range of areas; it is now among the strongest gun legislation in the world. I reassure her that the roll-out of the national firearms licensing management system to all forces in England and Wales is now complete. The system is fully operational.

James Gray: As someone who was brought up in Dunblane and lives near Hungerford, I feel very strongly about the subject of gun crime in inner cities and elsewhere. Does the Home Secretary agree that it is not about £1.5 million-worth of one-day actions collecting 10 guns, or about working with children in schools, both of which are perfectly legitimate things, and that the only thing that the little neds who carry guns illegally will understand is tough sentencing? If these guys know that they are going to go to prison, they will not carry the guns.

Jacqui Smith: That is why I am sure that the hon. Gentleman is pleased that in bringing forward the proposals for a minimum sentence for gun possession we have increased the average length of time that criminals serve for gun possession from about an average of 18 months in 2002 to well over 50 months now.

Pete Wishart: Plaid Cymru and Scottish National party Members fully associate ourselves with the remarks made about Gwyneth Dunwoody. She was a truly formidable politician.
	The Secretary of State knows that in Scotland we have a particular problem with airguns, which have resulted in three deaths and more than 1,000 injuries in the past few years. It is of such a scale that the Scottish Government have organised a gun summit that will be attended by the police, gun control campaigners and shooting groups—everybody other than herself and Home Office Ministers. Surely she could take a couple of hours out of her diary to come to the summit to explain what the UK Government are going to do about the issue, because if she does not, the impression will be that she could not care less about it and is prepared to do absolutely nothing.

Jacqui Smith: It is a shame that the hon. Gentleman's party is using the very good initiative of the summit and a whole range of actions to make cheap party political points. I have discussed gun control with his colleagues in the Scottish Executive, and I discussed the issue of airguns. They, like me, will therefore be pleased that the Violent Crime Reduction Act 2006 ensures that it is now necessary to have a licence to sell an air weapon and has increased to 18 the age limit for acquiring or possessing an air weapon. It is probably better if we work together to implement that legislation and to review what more we need to do, instead of making cheap political points that have more to do with the campaign for independence than with a campaign against gun crime.

National DNA Database

Gordon Banks: What estimate she has made of the number of convictions secured by the use of data from DNA samples retained on the national DNA database in 2007-08.

Meg Hillier: Data are available on the number of detections with DNA, but not the number of convictions. The data for 2007-08 will be available this coming June. To give an indication, in 2006-07, 41,148 crimes were detected in which a DNA match was available or played a part.

Gordon Banks: I thank my hon. Friend for that answer. Does she agree that, if further restrictions were placed on the data that are held on the national DNA database, she and other Home Office Ministers would not be in a position to come to the House and give such positive numbers?

Meg Hillier: I agree completely. Taking the figures for 2006-07 alone, 452 homicides, 644 rapes and 222 other sexual offences were among the offences detected thanks to the help of DNA. The murders in Suffolk by Steve Wright and the murder of Sally Anne Bowman by Mark Dixie were detected and those men imprisoned thanks to the DNA database.

Philip Hollobone: Dr. John Bond of the scientific support unit at Northamptonshire police has been at the forefront of developing DNA, forensics and other scientific techniques to detect crime and criminals. What specific incentives does the Home Office give to police forces to expand their scientific support operations?

Meg Hillier: The forensic science capability in this country is a very important issue. We are keen to ensure that we have proper forensic support across those bodies that supply that, including the police, and we now have a permanent regulator in the form of Andrew Rennison, who ensures that our forensics work is of top scientific quality.

Keith Vaz: Of course, I accept but the beneficial aspects of the DNA database, it is now the largest of any country in the world. It is estimated that there are 500,000 mistakes connected with the database. Can the Minister assure the House that that will be dealt with, and that the information contained on the database is protected from any unfortunate loss?

Meg Hillier: Security is of course an important issue. The National Policing Improvement Agency, which is responsible as the custodian of the DNA database, is also responsible for other key national databases and has a good track record. My right hon. Friend mentions replication, which is currently at 13.3 per cent. but going down. That is partly because in the early days of new DNA testing, police forces took extra samples to meet higher evidential standards. Much work has gone on to educate police forces in taking DNA samples, so that replication is being reduced. However, that does not adversely affect any of the individuals involved.

David Ruffley: More than 2,000 Dutch DNA samples, many relating to serious offences, were mislaid in 2007 for over a year due to the incompetence of UK authorities. Will the Minister tell us today exactly how many suspects have now been arrested by the UK police, and which offences were committed in this country?

Meg Hillier: This is an ongoing police investigation and it would be inappropriate for me to talk about any partial findings while that investigation, which is an operational matter, is going on. It would be wrong to identify or alert any of the individuals suspected, as it might give them the chance to go under cover. My right hon. Friend the Home Secretary made a commitment to this House to report back when we have all the information after a full, thorough investigation by the police.

Gordon Prentice: Does it bother my friend at all that DNA samples are held on people who are innocent of any crime?

Meg Hillier: We have solved an enormous number of crimes because of the data held on people who have had their DNA taken on arrest, whether they were charged or not. Up to 2005 alone, 3,000 offences were identified involving those arrested and not charged, including 37 murders, 16 attempted murders and 90 rapes. I ask my hon. Friend which of those crimes he would like not to have been solved.

Counter-Terrorism Bill

Henry Bellingham: What recent representations she has received on part 6 of the Counter-Terrorism Bill.

Tony McNulty: The Government have received representations on part 6 of the Counter-Terrorism Bill from four non-governmental organisations—Inquest, Liberty, Justice and Amnesty International—three trade organisations and a small number of private individuals, including one submission entitled "Fascism—the UK Government wants to change the law on inquest. Will this give the freemasons a licence to kill?"

Henry Bellingham: I am grateful to the Minister for that answer, but is he aware that the Bill gives the Home Secretary fundamental powers to overhaul the coroners system completely? For example, the Home Secretary will have the power to appoint the coroner, and to issue a certificate requiring an inquest to be held without a jury. Is today's terrorist threat so different from what we faced under the IRA that it is vital in the minds of the Home Secretary and the Minister to tear up hundreds of years of judicial procedure? Is that really necessary? Surely the Government should wait until a coroners Bill is before the House so that the matter can be properly discussed and debated.

Tony McNulty: I do not agree with much of that. I certainly do not agree that the legislation fundamentally changes the whole coroners system; it does not. It simply says that in one or two specific cases—terrorist and non-terrorist cases, by the bye—it might be necessary to go into such a context to get full closure for the families involved on the circumstances in which someone dies and how they have died. Some Opposition Members indicated that they had difficulties with that provision in the Bill and I am happy to discuss it further in Committee.

Patrick Mercer: In the summer, I lost nine of my friends in Afghanistan. None of their deaths has so far been the subject of a completed inquest. Their families are grieving. I utterly fail to understand why such a provision should be part of a counter-terrorism Bill. Will the Minister listen to many of his Labour colleagues who have said to me that we need a proper coroners Bill, not a provision that is part of a totally different and overweening Bill?

Tony McNulty: I agree with the second part of the hon. Gentleman's question. The whole House agrees that there is a need for substantial reform of the coroners system, which is forthcoming. But to alleviate and obviate at least some of the delays that he talks about—I have huge sympathy with what he says about them—it is important to include the provision in question at this stage. The hon. Gentleman will be on the Committee considering the Bill, and as I indicated on Second Reading, I am open to exploring how we can resolve a problem that everyone is aware of—the use of sensitive and secure material in such cases—to ensure that the system works well and is expeditious, so that people are not left in the sort of limbo he describes. Let us talk about that in Committee.

Right to Remain

Laurence Robertson: What the average time taken to determine applications for the right to remain in the UK was in the last 12 months; and if she will make a statement.

Liam Byrne: Published targets are to make 70 per cent. of decisions on postal applications within 20 days of receipt and to make 90 per cent. within 70 days. Complex cases and applications by overstayers, or by those in breach of the rules, can take a bit longer.

Laurence Robertson: I am grateful for the Minister's answer and his earlier contact. However, he knows that I—and perhaps other colleagues—have several cases that take considerably longer to determine. One problem appears to be the delay in allocating case workers to each application. Some applications will be refused, and people will have to go back to their countries, but at least that is a decision, and they can get on with their lives. However, it is often difficult for people who are waiting to start education courses or who wish to visit their country and then return here. I had a constituent whose mother was dying in hospital abroad and, because of delays, she could not visit, and her mother died. Will the Minister do what he can to speed up the process? Some results will be negative but that is better than the delays that currently occur.

Liam Byrne: I am grateful to the hon. Gentleman for not only for his question but for the conversation earlier today. I hope that we can resolve quickly the cases that are on the table. Approximately two thirds of applications for indefinite leave to remain are resolved within 20 days and nearly 90 per cent. are resolved in 70 days. However, many cases are outside that target, and the UK Border Agency needs to work faster to get them resolved quickly. Many of the lessons that we drew from creating fast-track asylum teams around the country are being applied to those cases. I therefore hope that faster progress will be made on that front in 2008.

David Kidney: Will my hon. Friend assure me that the right to remain in the UK is forfeited if somebody commits a serious crime and serves a sentence of imprisonment? Can he confirm that, in those cases, such people leave the country?

Liam Byrne: Yes, I can. Indeed, the powers that the UK Border Agency takes under the UK Borders Act 2007 will also provide for stiffer sanctions. However, we have said consistently that we should prioritise the removal of those who have abused our welcome and broken our laws. I am therefore pleased that the UK Border Agency deported 80 per cent. more foreign national prisoners last year. The new agency this year will set tougher targets and we expect it to deport more than 5,000 foreign national prisoners. That is a different order of magnitude from a couple of years ago.

Gerald Howarth: The Minister may know that the former Home Secretary's decision to refuse citizenship to Mr. Mohamed Fayed was dispatched in a matter of weeks. Given the great distress and burden on the public purse caused by Fayed's absurd allegations, will the Home Secretary take swift action to remove for good as an undesirable alien that thief, crook and liar?

Liam Byrne: Mr. Speaker, you will know that I have made it my policy not to discuss individual cases on the Floor of the House. Suffice it to say that the comments are on the record.

Patricia Hewitt: My hon. Friend will know that some employers in our country and others in the Indian sub-continent have expressed concern that the new system of points-based work permits for those seeking to come to Britain or remain here for the purpose of working may make it more difficult for several people to come here to work. Will he assure me that, under the new system and with the new agency, Britain will continue to benefit from the talents of those who want to work here and can contribute to our economy, without undue delays in processing their applications?

Liam Byrne: I am grateful to my right hon. Friend for those remarks. Trevor Phillips was right to say yesterday that there is a type of talent around the world from which the UK would benefit in the right circumstances. A little later this week, we have our first debate in Government time on the points system. It is important because it precedes the publication on the way in which we believe that the key stage of the points system will work. We will publish that policy after purdah. There will be a chance for hon. Members of all parties to put their views on the record before we finalise it.

John Gummer: If things are going as well as that, when will the Minister do something about the four months that it has taken to right a wrong—the wrong declared by an appeal judge —done to my constituent, Mrs. Massiah Stockings? When will he ensure that the wife of a serving officer in Helmand province will be given leave to remain in this country, not told that she has to send his passport in? When will he ensure that a man who is British by both parents can get a passport and not be asked impudent questions by officials about why he cannot produce his parents' divorce document from some 40 years ago?

Liam Byrne: The right hon. Gentleman will know that about half of the casework in my constituency concerns immigration matters. It sounds as though he has quite a lot of his own, and I should be happy to discuss those issues with him in private, if that would help to expedite the cases that are of concern to him.

Policy Formulation

Evan Harris: What mechanisms her Department has in place to ensure that its formulation of policy is evidence-based.

Jacqui Smith: The Home Office's policy-making process makes it clear that policies should be based on sound evidence. This is supported by the Department's 330-plus scientific staff and the outputs from a variety of Home Office-funded research programmes.

Evan Harris: May I invite the Home Secretary to comment on one example, which is the Government's proposal to reclassify cannabis from class C to class B? If it is a policy decision or simply politics—a bad policy and bad politics—that is fine, but why ask the Advisory Council on the Misuse of Drugs to look into the evidence for doing so, yet then plan to reject that advice and reclassify anyway? What is the point of having those structures for scientific advice if the Government have predetermined their position?

Jacqui Smith: The only thing that I said on the record about the matter was that I would wait to see the advice that the advisory council gave. However, it is of course for advisers to advise and for the Government, as we are elected to, to decide.

Gisela Stuart: The Home Secretary is right to remind the House that advisers are there to advise. One area where I would ask her to challenge the advisory council's decision is on the use of khat, a drug used particularly by the Yemeni community that is currently legal, but which is causing disproportionate problems in some areas of our cities. I would ask the advisory council to look seriously at khat again and consider proscribing it.

Jacqui Smith: My hon. Friend makes an important point. One of the actions that we have undertaken under the 10-year drugs strategy that we published last month is to look in more detail at the growing impact of khat and what that implies for how we deal with it, in the way that she suggests.

Humfrey Malins: Of course all policy should be based on evidence. My experience in the criminal courts is that a much more effective and cheaper alternative to prison for many drug offenders is a residential drug rehab bed, yet the Home Office has never been able to undertake research into what is more effective in reducing reconviction rates. Could the Home Office take a careful look and see whether appropriate research can be commissioned?

Jacqui Smith: One of the other things that we are clear about in the drugs strategy is the need to maintain our research into the most effective forms of drug treatment. However, there is clear evidence that doubling the availability of drug treatment saw a 20 per cent. reduction in acquisitive crime. In increasing drug treatment, we have seen crime reducing. As the hon. Gentleman rightly pointed out, we now need to be clear that that increased investment in treatment is going to the most effective forms of treatment, and we will ensure that that happens.

Madeleine Moon: A draft research proposal using the inelegantly titled PEACE process—I am told that it stands for "Planning and Preparation; Engage and Explain; Account, Clarification and Challenge; Closure; Evaluation" and uses interpreters for interviews with non-English-speaking suspects—has been put forward by Kerry Marlow, one of my constituents, and his research group. Is that not a prime example of the police taking forward research that they need to improve working practices that the Home Office should be considering?

Jacqui Smith: I cannot claim to have looked at that piece of research, but now that my hon. Friend has brought it to my attention and identified it as something that the local police are keen to research, I am sure that we will take a closer look at it.

Damian Green: While the Home Secretary is pondering the merits of evidence-based policies, perhaps she will take into account the evidence of the House of Lords Economic Affairs Committee on her immigration policy. The Committee includes former Labour Ministers, a distinguished economist—Professor Richard Layard—and the Government's own pensions adviser, Adair Turner. That Committee concludes that the Home Secretary's main defence for her policy—that it increases gross domestic product—is, in the Committee's words, "irrelevant" and "misleading". Why should anyone believe the Home Secretary's evidence rather than that of a cross-party Committee of people who actually know what they are talking about?

Jacqui Smith: Actually, we have always argued that there is a positive impact from immigration, and that is supported by the Committee. However, I think that what the Committee says proves that we were right to set up the independent migration advisory committee to provide us with evidence for our new points-based system on which individuals will most benefit this country in terms of the skills that they bring. The largest reform in the immigration system for 40 years is based on that evidence and on that objective.

Immigration Checks (London Airports)

Richard Ottaway: What recent representations she has received on the time taken to complete immigration checks at London airports.

Liam Byrne: We have recently received a number of representations from a variety of stakeholders about the time that it takes to complete immigration checks at London airports. Records show that, in the past 12 months, there have been 19 parliamentary questions relating to queuing times.

Richard Ottaway: Whatever the Minister might say about the average time taken to get through immigration being below the target level, the truth is that the situation is getting worse. That is creating a bad impression and undermining the reputation of a world-class city. What is the reason for that? What is going on? What steps is the Minister taking to improve the situation?

Liam Byrne: The growth in passenger numbers between 2005 and 2007 was about 5 and a bit per cent. Over the same period, the number of immigration officers increased by about 33 per cent. Obviously, that growth is now spread around a lot of different airports, so there are particular pinch points, and I think that Heathrow has become one of them. This is exactly why we have said that we will increase the budget for border control by 10 per cent. this year. That will mean 300 extra staff, and I am pleased to be able to say that 150 of those will be for Heathrow.

Barry Sheerman: What evidence is there that some of these hold-ups are caused by females of a particular religious sect who cover their faces and refuse to reveal them as they go through immigration? Is there any evidence that that is causing problems?

Liam Byrne: There is no evidence of that. Everyone is required to identify themselves as directed by an immigration officer. If an identity is ever in any doubt, immigration officers will not hesitate to check a person's fingerprints as well.

James Clappison: Would not the time taken to carry out immigration checks be speeded up if fewer work permits were issued for overseas workers to come to this country, and if the Government heeded the central conclusion of the House of Lords Economic Affairs Committee, which states that
	"we have found no evidence for the argument, made by the Government, business and many others, that net immigration...generates significant economic benefits for the existing UK population"?
	That blows out of the water the case that has just been made by the Home Secretary, although I have no doubt that it will not stop her making it. Will the Government actually listen to the evidence that has been produced by that expert Committee?

Liam Byrne: I am not sure whether that was a call by the Conservatives for a policy of zero immigration. I hope that the hon. Gentleman will have a chance on Thursday to unpack some of those comments in greater detail.

Identity Fraud

Anne Begg: What recent estimate she has made of the cost of identity fraud.

Meg Hillier: We previously estimated the cost of identity fraud at about £1.7 billion a year, but we are currently engaged in calculating a new estimate which we intend to announce shortly.

Anne Begg: Following a straw poll in my office, we discovered that two members of my staff had been victims of identity fraud involving money being taken out of their bank accounts. In any review of the cost of identity fraud, will the Minister ensure that account is taken of the cost to the individual of correcting the errors and getting their money back, as well as the cost of the money taken from the bank account in the first place?

Meg Hillier: A great deal of work has been done to assess the cost in time, effort and the impact on individuals. It is estimated that it takes an average of 48 hours to sort out the problems of identity fraud. Figures from CIFAS, the UK fraud prevention service, show that about 65,000 individuals were victims of fraud. We take these figures very seriously, and we all need to work together to tackle identity fraud across the piece.

James Brokenshire: The illegal online trade in stolen identities which fuels ID fraud, and the costs associated with it, operates across borders, yet the Government have not bothered to ratify the international treaty to combat cybercrime that they signed as far back as 2001. Why not?

Meg Hillier: We continue to look into the issues of international identity fraud and will continue to do so in order to ensure that we protect the British public to the best of our ability. It is worth stressing, however, that preventing identity fraud is not a matter only for the Government, so I would urge any individual not to release personal information, to use only secure websites— [Interruption]—to get credit references and, of course, to notify key players of changes of address— [Interruption.] It is a serious point, Mr. Speaker, and I am sorry that the Opposition seem to think— [Interruption.]

Mr. Speaker: Order. Allow the Minister to speak.

Meg Hillier: I am sorry that the Opposition seem to think that this is a laughing matter, but the reality is that tackling identity fraud is a matter not only for a number of agencies, including the Government, but also for individuals. It is my responsibility as Minister always to remind individuals to do their bit to prevent identity fraud.

Illegal Immigrants

Andrew MacKay: What recent estimate she has made of the number of illegal immigrants in the UK.

Liam Byrne: With permission, I should like to answer questions 8 and 20 together.

Mr. Speaker: Order. The Speaker must be informed in advance of a grouping of questions, so the Minister is answering only the question put by Mr. Mackay.

Liam Byrne: Thank you, Mr. Speaker.
	Since the phasing out of exit controls in 1994, no Government have been able to produce an accurate figure for the number of people who are in the country illegally. By Christmas, however, our border information systems will count in and out the majority of foreign nationals. Together with fingerprinting visa applicants and the issuing of ID cards to foreign nationals, that will ensure that a much more effective set of controls will be in place.

Andrew MacKay: Was the Minister surprised that nine illegal immigrants from Cambridge who were given train tickets to London and told to report to the immigration centre in Croydon failed to turn up, and what is he doing to find them?

Liam Byrne: The policy of the UK Border Agency over the past year has been quite clear: when there are lorry drops, they are all attended by immigration officers and the people are immediately taken to detention centres, where their claims—some will obviously claim asylum—are processed. That policy has been the fruit of new partnerships with the police up and down the country; almost all constabularies have immigration crime partnerships in place and one of the most fundamental objectives is to ensure that everyone detected at a lorry drop who we think is an illegal immigrant is arrested and brought to detention centres.

David Evennett: The Home Secretary said that the new UK Border Agency would have
	"tough customs, immigration and police-like powers",
	so why did the Government decide to create an agency with "police-like powers" rather than follow Opposition calls to integrate the police into a UK border force so that a robust force with real powers could tackle illegal immigration?

Liam Byrne: The steps taken to create one agency with £2 billion of resources, 25,000 staff and 9,000 warranted officers have been widely welcomed in the House. Obviously, that agency has to work closely with the police, who have all kinds of other jobs to do at our ports. As the Home Secretary said a week or two ago, discussions with the police—both with the Association of Chief Police Officers and with constabularies up and down the country—about the best way for the new agency to work in an integrated manner with the police will continue, as, indeed, the Prime Minister promised in his statement of last year.

Fear of Crime

David Taylor: What recent representations she has received on levels of fear of crime among young people and pensioners.

Vernon Coaker: We take seriously the fear of crime wherever it occurs and we are taking steps to reduce crime and the fear of crime. According to the 2006-07 British crime survey, younger people have the highest levels of worry about violence and car crime and are more likely than older people to be victims of crime. Older people are less likely to be victims of crime than other age groups. However, their fear of crime is disproportionately high when compared with their low risk of being a victim.

David Taylor: The British crime survey for 2007 records overall crime falling by 32 per cent. since 1997 and 5.5 million fewer victims than in 1995, yet fear of crime continues to paralyse too many lives, both old and young alike. What discussions has the Minister had with the Youth Justice Board and Department for Communities and Local Government colleagues about Age Concern recommendations to have regular intergenerational meetings in all communities so that young and old alike can discuss their fears and counter the destabilising threat of age-related segregation?

Vernon Coaker: I know that my hon. Friend works closely with Age Concern in his constituency, and as a former magistrate he knows the importance of different generations working together. At a recent conference, we discussed the issue of intergenerational liaison to enable elderly and younger people to discuss fear of crime. It is often said that there is a difference between older and younger people. There might be such a difference in perception, but it is in everybody's interest—whether they are old, middle-aged or young—to reduce crime and the fear of crime.

Alistair Burt: The understandable fear of crime felt by my rural constituents of all ages is partly based on their awareness of the fact that national police targets are forced on local chief constables, and in their circumstances that means the concentration on urban crime leaving too many isolated rural communities at the mercy of travelling intimidating thieves. How long will it be before local chief constables get more scope to decide their own priorities, rather than following those of the Home Office?

Vernon Coaker: I think that the hon. Gentleman would accept that all levels of crime in all areas of the country have fallen dramatically over the last 10 years, and he should also accept that with the new police assessment framework we have ensured greater scope for local chief constables to determine their priorities. One of the best ways to ensure that local people get the policing they want is the roll-out of neighbourhood policing, which was completed on 1 April.
	Alongside that, people in the hon. Gentleman's constituency will be helped by the Home Secretary's announcement that, from July, local crime information will be published, which will allow his constituents to see how well the police force is doing and help them to establish the priorities that there should be in each area.

Police Community Support Officers

Ann Coffey: If she will make a statement on the contribution to policing made by PCSOs.

Tony McNulty: PCSOs are an invaluable addition to policing. They engage with their local community, provide high-visibility reassurance, and deal with low-level crime and antisocial behaviour. They are complementary and supplementary to the police, and communities up and down the country are benefiting from their presence and their work.

Ann Coffey: In my constituency, PCSOs have helped to decrease theft from cars by patrolling hot spots. They take 75 per cent. of all antisocial behaviour order cases to the local panel and their visible presence on the streets is much welcomed by the public. Can my right hon. Friend assure me that the funding for PCSOs will continue beyond 2008 and become part of the general policing grant, so that my constituents can continue to benefit from successful neighbourhood policing in my area?

Tony McNulty: I know that my hon. Friend does a lot of work with local police in her area and that her police division does exceptional work, including the PCSOs. They are to be commended on that. I can assure her that over the next comprehensive spending review period—and, I suspect, beyond, although I should not say that—we have committed to the funding and that work will continue. There is a debate, which ultimately we need to address, about whether the neighbourhood policing fund should be subsumed into the police grant and un-ring-fenced, but for now she can have the assurance that over the next three years that money is assured.

Ian Taylor: May I congratulate the Minister on the initiative behind community support officers? It has been one of the better initiatives of this Government, and I welcome all those PCSOs in my constituency. However, as my constituency is in Surrey, he will be more than aware of the Government's gross underfunding, under the formulae, of Surrey police. This has become a crisis situation. He has proposed capping the police element of the county council's council tax, yet has made no offer to substitute for the shortfall that would then emerge for Surrey police. The year-on-year underfunding of the Surrey force is causing great concern for the residents of that county.

Tony McNulty: I am more than aware of the circumstances of Surrey's police and their resource base, although I do not think that I would characterise that in quite the terms that the hon. Gentleman used. He will know that following my hon. Friend the Minister for Local Government announcing the capping criteria, all police authorities involved have some 21 days to put their case together. My hon. Friend and I will be meeting them.
	I am sure that Surrey will put its case, and do so quite robustly, and I am happy to offer the hon. Gentleman and other Surrey MPs a separate meeting to look at that matter, as I have authorities on the list of six or seven police authorities that are at least in the frame to be capped, although that will not necessarily happen. Those decisions will be determined at a later date.

Kevan Jones: Will my right hon. Friend join me in congratulating Durham police on the roll-out of neighbourhood policing? Police community support officers have played a key part in the rolling out of that initiative. Does my right hon. Friend agree that, although the Opposition voted against the introduction of PCSOs, they have become a vital part of the delivery of neighbourhood policing in rural communities such as Durham?

Tony McNulty: I agree wholeheartedly. I happened to be up in Durham looking at neighbourhood policing a couple of Fridays ago, and—this brings me back to the point made by the hon. Member for North-East Bedfordshire (Alistair Burt)—I saw that both urban and rural communities were benefiting from it.
	Like anyone else, I take great joy from the repentance of sinners. If the Opposition now endorse PCSOs and all that they are doing to help our warranted police officers up and down the country, I shall be a very happy man.

Topical Questions

Tony Baldry: If she will make a statement on her departmental responsibilities.

Jacqui Smith: My Department is responsible for the security of our nation's borders. That is why I launched the new UK Border Agency, which brings together the work of the Border and Immigration Agency, Ukvisas and Customs at the border. In its first two weeks alone, the agency barred more than 800 illegal migrants from boarding planes to the UK or crossing into Britain at juxtaposed controls, and seized more than 50 kg of ecstasy, 40 kg of cocaine and 20 kg of heroin. It is vital for the agency to be fully accountable for its work, which is why I am pleased to announce that I am appointing John Vine as the first chief inspector for the UK Border Agency. Mr. Vine has been chief constable of Tayside police since 2000, during which time he was president of the Association of Chief Police Officers in Scotland. He will take up his appointment in July 2008.

Tony Baldry: When will the Home Secretary recognise that there is no evidence in favour of extending detention without charge beyond 28 days? It is not just the usual suspects who are saying that; it is being said by Sir Ken Macdonald, the Director of Public Prosecutions, and by Sue Hemming, who heads the counter-terrorism section of the Crown Prosecution Service. A whole cacophony of informed opinion opposes the Home Secretary on this matter. Sir Ian Blair has said that there has been no case in which the Met police have required a person to be held for more than 28 days. When will the Home Secretary present the House with evidence to support this substantial erosion of liberty?

Jacqui Smith: I have discussed the issue at length, both during my appearances before the Home Affairs Committee and on Second Reading of the Counter-Terrorism Bill. I have provided the House with considerable evidence—as supplied to me, not least by chief police officers—of the growing scale and complexity of terrorist investigations that are now being undertaken, and the nature of those investigations. Because of what may well come to pass if the plots in question are not foiled, it is necessary to step in early.
	Those factors have led senior police officers, and me as Home Secretary, to believe that at some point in the future it may well be necessary to investigate for longer than 28 days, which is why we are including in the Bill a reserve power not to extend the period now, but to ensure that the risk is covered in the future. If the hon. Gentleman feels happy to live with the risk, that is up to him. My responsibility as Home Secretary is to do the right thing, on the basis of the evidence, to keep the country safe.

Joan Humble: Last week my right hon. Friend made a statement about preventing people from becoming terrorists. As she will know, the Lancashire constabulary already work closely with communities, schools and places of worship. Can she explain how her initiative will take that work further to identify, in particular, young people who might be led astray and prevent them from becoming next year's or next month's terrorists?

Jacqui Smith: My hon. Friend has made an important point. In the short term, it is crucial for us to have the legislation and the ability to investigate and bring to justice people who are now plotting terrorist attacks against our country and our interests, but in the longer term we cannot arrest our way out of the problem. That is why we need to invest in expertise and capacity so that work can be done in our prisons and with the young people cited by my hon. Friend, whether through the provision of extra police officers or through the money that my right hon. Friend the Secretary of State for Communities and Local Government has made available to community organisations. We need to prevent people from becoming terrorists and supporting violent extremism in the first place. We take this issue seriously because, as my hon. Friend says, in the long term that is how we will prevent the continued and growing threat to this country from terrorism.

David Davies: The Home Office demands a vast array of statistics all the time from police authority areas and yet has recently decided that it no longer wishes to know how many police officers are injured each year in the line of duty. Will the Home Secretary tell us why she feels that this is no longer an important piece of information to collect?

Tony McNulty: The Home Office, working with the 43 police forces, is constantly reviewing the information that it keeps. I think the hon. Gentleman is completely in error; I say that with hesitation, not least because he has recently beaten up the "Pink Pounder", who is 10 years older than he is. Quite why the hon. Gentleman should be getting in a boxing ring with someone 10 years older is his own business. Those data will be collected; information on police injuries is important to us. The form in which the information is collected may, as he suggests, have changed, but we are constantly reviewing our data. I am happy to meet him to discuss the matter further, but not in a boxing ring.

Sally Keeble: Is my right hon. Friend aware of the concern about some of the heavy discounting of alcohol that has taken place recently? Will she work with colleagues in other Departments to look at providing a floor below which discounting could not fall in the interests of tackling some of the worst excesses of binge drinking?

Vernon Coaker: I know that my hon. Friend is very concerned about the effects of binge drinking in her constituency and across the country, and she will know that the Home Office and the Department of Health are looking at the impact of discounting in supermarkets and elsewhere and the effect that that has on alcohol consumption. That report will be with us in July or August of this year. We look forward to receiving it so that we can determine the best way forward in that important area of work.

David Davis: Before I ask my question, may I thank the Home Secretary for what she had to say about Gwyneth Dunwoody? She was a very close friend of mine and we will all miss her greatly.
	After the aggressive behaviour of the blue-tracksuited Chinese officials guarding the Olympic torch relay through London, I wrote to the Home Secretary to ask what authorisation she had given to these characters to exercise force on the streets of London. She wrote back and said none. But she did not answer the question as to what checks she had made on their background and particularly whether they were members of the Chinese People's Armed Police, a paramilitary riot control organisation. Will she answer that now? What checks did she do? Were they members of the People's Armed Police? On what legal basis did they manhandle British citizens on the streets of London?

Jacqui Smith: I made clear in my letter to the right hon. Gentleman that the Chinese torch officials had no executive power in London. The basis of their agreement was that they were to protect the torch, with activity limited to putting themselves between the torch and anyone who was trying either to take it or to do it damage. They were of course issued with visit visas by the embassy in Beijing on the same basis as anyone else would have been in accordance with standard procedures, including biometric checks. I reiterate to the right hon. Gentleman that they had no policing role. I spelt that out at some length and clearly in my response to him.

David Davis: Well, we note that we still have not got the answer as to who they were. But even the Mayor of London concedes that it was a mistake to subcontract crowd control to Chinese military security. If Chinese military security was not authorised, as she says, what representations has she made to the Chinese Government about the assault on British citizens? Has she made it clear that they cannot behave as though Trafalgar square were Tiananmen square?

Jacqui Smith: There was no subcontracting of responsibilities. Security in London is a matter for the police and the security services. The Metropolitan Police Service was responsible for the safety, security and safe passage of the torch bearer and the torch as it travelled through London. They had the executive power where it was necessary. There was no executive power vested in the Chinese torch officials, who are a standard part, I understand, of any Olympic organising committee and have very limited responsibilities. Furthermore, if there are allegations of unlawful actions, it is absolutely right that anybody who believes that they have taken place should report them to the police, who will investigate.

David Borrow: Ministers promised some time ago that from 1 April this year every community would be served by neighbourhood policing teams. Police in Lancashire have pioneered that policy, along with several other police services. Has my right hon. Friend the Secretary of State been able to assess the success of the policy in Lancashire, in particular in rural and semi-rural areas which were not seen as natural homes for community policing when it was first developed in urban areas?

Jacqui Smith: As my right hon. Friend the Minister for Security, Counter-Terrorism, Crime and Policing made clear, an analysis of the success of neighbourhood policing in some areas ensured that, with the strong leadership of senior police officers and the National Policing Improvement Agency, we were able by the beginning of this month to have neighbourhood policing teams in every neighbourhood in the country. Importantly, those teams can respond and act differently, depending on the priorities and circumstances of local areas. That is why our preliminary evidence is that in both rural and urban areas not only are neighbourhood policing teams helping to bring down levels of crime and antisocial behaviour, but they are helping to increase confidence and the involvement of local people in tackling such issues.

Ben Wallace: Last year, the Association of Chief Police Officers led a review of the Regulation of Investigatory Powers Act 2000 and made some 20 legislative recommendations to allow front-line policemen, crime squads and counter-terrorism officers to carry out their jobs more efficiently, and to ensure that terrorism is off our streets sooner rather than later. Why, then, is not one of those 20 recommendations included in the Counter-Terrorism Bill due to be examined in Committee this week? Is not that because the Bill is much more about political posturing than about helping our front-line officers?

Tony McNulty: Certainly not, in answer to that last question: the Counter-Terrorism Bill is about the protection and security of the public in this country, full stop.  [Interruption.] No, absolutely not; the right hon. Member for Haltemprice and Howden (David Davis) is entirely wrong. Unlike him—as he declared in  The Sunday Telegraph some time ago—we do not run counter-terrorism and security policy by focus group; he should be ashamed of himself for that. We take national security more seriously. Many of the 20 recommendations mentioned do not require legislation; many of them—certainly those to do with bureaucracy and paperwork—have been dealt with by ACPO. I agree, however, with the import of the comments of the hon. Member for Lancaster and Wyre (Mr. Wallace) that there is still an issue to do with police forces taking full cognisance of ACPO's guidance; we do not need 16 pages in order to authorise many of the aspects of intervention and surveillance under RIPA, as ACPO says that two will suffice. There will also be a need for further legislation in terms not only of ACPO's recommendations, but of other aspects of intercept and surveillance more generally. Hopefully, they will be dealt with at a subsequent time, when we find the appropriate legislative vehicle.

Christopher Huhne: Britain's most senior Muslim police officer, Tarique Ghaffur, the assistant commissioner of the Metropolitan police, has confirmed that he believes that 42 days' detention without charge would be counter-productive and that there is a danger that it will make the police's long-term job harder. Will the Secretary of State now recognise that, tragically, she is repeating the mistakes of Northern Ireland by going over the top on legal powers of detention, which will only alienate Britain's ethnic minority communities and dry up terrorism intelligence, and make witnesses more inhibited and convictions harder to achieve?

Jacqui Smith: Let me quote the words of Assistant Commissioner Tarique Ghaffur on Friday:
	"I do not lead on counter-terrorism matters for the Metropolitan Police Service and I respect the professional assessment of colleagues who deal with counter-terrorism on a daily basis, and who envisage circumstances arising when the current upper limit of 28 days is not going to prove sufficient."
	Those colleagues include Peter Clarke, former head of counter-terrorist command, Bob Quick, assistant commissioner for special operations—whose letter to me is available in the House of Commons Library—ACPO and the commissioner of the Metropolitan police.
	I choose, in making a judgment about keeping this country safe, to listen to the police officers whom we task with investigating terrorist offences and keeping us safe in a proportionate and precautionary way. Unlike Opposition Members, I am not willing to live with the risk of not taking action now to keep this country safe.

Peter Bone: Last Friday, a constituent came to see me at my advice surgery. On 18 April 2000, he claimed asylum, and despite help from the previous Member of Parliament, his case has still not been decided. Unfortunately, it is not an isolated case. I have a number of constituents who have waited many years for their cases to be decided. Is this fair to the asylum seeker, his family and the taxpayer?

Liam Byrne: It is very difficult to speculate on the circumstances of an individual case, but if it helps the hon. Gentleman, of course I shall be happy to see him and discuss it in detail.

Jo Swinson: My constituent, Mr. Fereydum Bahrami, applied for indefinite leave to remain in 2004, and the Home Office is reviewing its initial decision to refuse. Indeed, in November 2005, it stated that
	"Mr. Bahrami's case will now be reviewed as a priority".
	Two and a half years later, there is no decision. May I ask the Home Secretary to look at the case and make a decision, and to apologise for the delay?

Liam Byrne: I will add that one to my list as well.

Financial Stability

Alistair Darling: With your permission, Mr. Speaker, I would like to make a statement about this morning's announcement by the Bank of England to improve conditions in the financial markets. This scheme has been developed following extensive discussions with the Treasury and the Financial Services Authority. I also want to report on the recent G7 meeting in Washington on restoring financial stability to financial markets. I will also report on the measures that we are taking here at home to strengthen the stability of the banking system, as well as to help home owners with their mortgages.
	Before I set out in further detail the Bank of England's special scheme, let me remind the House of the background against which it has been developed. The financial markets throughout the world remain turbulent, following the problems that arose in the US housing market last year. Functioning financial markets rely on banks and building societies being able to raise finance from each other, and from other investors, including through securitisation markets and through inter-bank lending markets. These funds can then be used to finance lending to businesses and to consumers, including the provision of mortgages.
	However, global financial markets are currently not functioning normally. Across the world, there is a lack of confidence in credit markets, most notably in mortgage-backed securities. That lack of confidence was prompted by the downturn in the US housing market, and in particular by the problems associated with sub-prime mortgages there. Banks are reluctant to lend to each other, and as a result lending to customers is more expensive and more restricted.
	Along with other central banks, the Bank of England has, over the past few months, made additional funding available to the markets through its regular market operations. The UK financial system remains fundamentally strong, and the Bank of England's action has helped to take some of the pressure out of the system by giving banks additional liquidity to continue their usual banking operations. Indeed, last week the Bank of England made a further £15 billion available, over three months, as part of its open market operations, and the Governor has said that he is committed to providing the liquidity assistance that the system as a whole needs to enable it to function normally.
	Here at home, the economy continues to grow. Last week's figures confirm that unemployment remains low and employment high. That, and the recent interest rate cuts, will provide wider support for the housing market and the wider economy. As banks here and across the world disclose their losses and strengthen their financial positions, which will help to rebuild confidence, the Bank of England can now take action to ease conditions in the financial markets, particularly in relation to mortgage-backed securities.
	The special scheme announced today by the Bank of England is a further step towards tackling the problems that have become more evident in recent weeks with the increasing cost and decreasing availability of lending by banks and building societies. Under the new scheme, for a six-month period the banks and building societies, and other institutions that are eligible for the Bank's standing facility, will be able to enter into agreements with the Bank of England under which they exchange high-quality asset-backed securities for Treasury bills. They can then hold these bills or trade them in the markets. Each exchange agreement will be for a maximum of a year but can be renewed at the Bank's discretion, so that the exchange could be ultimately for up to three years. The arrangement is available only for assets existing at the end of December last year and does not apply to new lending since then.
	At the end of the scheme, the banks will return the Treasury bills to the Bank of England and will receive back the securities that they provided as collateral. This means that the banks will continue to hold the risk on the securities that they provide, so it is they, rather than the Bank of England, that will be exposed to any fall in value. At all times, the banks must provide as security to the Bank of England assets worth significantly more than the Treasury bills they receive in return. If the value of their assets falls, the banks must provide more assets to the Bank of England or return some of their Treasury bills. They will be charged a commercial rate, so there is no subsidy to the banking sector.
	The Bank of England expects the initial take-up to be £50 billion. It will monitor the position daily, both to check new bids from banks and to track the value of the assets exchanged as collateral. The Treasury is supporting the scheme announced by the Bank of England by lending to it—at a commercial rate—the Treasury bills which it will then exchange with the banks and building societies. As the House will know, the Government stand behind the Bank as its sole shareholder, and we are making this clear by providing an indemnity. The Bank of England believes that these measures will support the banking sector during the present period of uncertainty and will help to restore the stability that the financial markets need both now and in the longer term. This will help to alleviate the problems that have seen banks reluctant to lend to each other, and, in turn, support the provision of new mortgage lending.
	Maintaining economic and financial stability is a key objective. In addition to the Bank of England's announcement, I can confirm to the House that the Government will take further action at home, and internationally, to restore stability in financial markets. It is important that banks continue to make full disclosure of their exposure to losses, and that they do so as soon as possible. That is why, at the G7 and International Monetary Fund committee meetings in Washington, we agreed that banks should be as open as possible—as quickly as possible—in order to remove the continuing uncertainty as to their true positions. This process has started throughout the world, including here in Britain, with banks disclosing their losses and making proposals to rebuild their capital position.
	Transparency is an essential part, along with other steps that we are taking, of stabilising financial markets. In Washington last week, the Financial Stability Forum agreed a range of actions—some to be implemented in the next three months, and others for the longer term. We agreed to strengthen the oversight of risk management, including capital and liquidity, clearer standards for valuation and transparency, and changes in the role and use of credit ratings. We will strengthen international co-operation so that we are better able to prevent crises and deal with problems that occur. We are also working with the IMF to allow it to play a greater role in providing early warning of the threats to financial stability, so that the relevant authorities can take early action to prevent these actions in the future.
	Here at home, we are about to finish consulting on the reforms to the banking system that I announced in January. These reforms will make it easier to intervene in the event that a bank gets into trouble, in order to protect depositors and maintain the stability of the financial system. Because it is important that we get this right, I will continue to hold discussions with the industry on the detail of these proposals before bringing forward legislation. We will also want to make changes to the Bank of England to emphasise its role in maintaining financial stability.
	The responses that we have received so far to the consultation have made it clear that, given the importance of these reforms, it is crucial that we have further discussions. Once those are completed, I can confirm that it is our intention to introduce legislation this Session to strengthen financial stability and depositor protection. The legislation needs to be on the statute book early next year, when some of the provisions of the Banking (Special Provisions) Act 2008, which we passed in February, are due to expire.
	Finally, we are determined to do everything that we can to help home owners, so I am meeting the Council of Mortgage Lenders, the Finance and Leasing Association and major lenders tomorrow, along with the Chief Secretary to the Treasury and the Minister for Housing. Since 2004, mortgage lenders have been required by statute to treat their customers fairly, and at our meeting I will be discussing how banks and building societies can help people whose fixed-rate mortgages are coming to an end, as well as helping people who may get into difficulties in repaying their mortgages. Banks and building societies have a duty to treat their customers fairly and, in the light of everything we are doing, I want to discuss how they can pass on the benefits of falling interest rates as well as wider Government support to mortgage holders.
	The Government will continue, along with the Bank of England and the Financial Services Authority, to do everything they can to maintain stability. The announcement by the Bank of England this morning will help to resolve problems in the wholesale financial markets, which have a subsequent impact on the retail markets, and so help businesses, individuals and, in particular, the mortgage market. I commend this statement to the House.

George Osborne: I thank the Chancellor for prior sight of his statement, and the Governor of the Bank of England, who phoned me yesterday to explain in advance what he was proposing to do. On a lighter note, I welcome the hon. Member for Sheffield, Hillsborough (Ms Smith), who is still in her place—the call from the west wing clearly worked, although judging by the Prime Minister's face, that was the last time that they will talk.
	It is nine months since the credit crunch began. We know from the recent International Monetary Fund report, to which the Chancellor referred, that Britain has been left more exposed than any other European country: it has the highest Government borrowing in the developed world and the highest personal debt on record. Of course we welcome any international moves to improve stability. Such moves should include reforms to the Basel accords. Surely it is time to look at counter-cyclical capital rules, so that we try to avoid this boom and bust in debt and asset prices in future.
	I know that the Prime Minister was with the Kennedy clan last week. Perhaps he should borrow a phrase from President Kennedy: next time, let us fix the roof "when the sun is shining." In the meantime, the Bank of England has to pick up the pieces. I broadly welcome the liquidities scheme that it announced this morning.  [Interruption.] Indeed, we were recently calling for it. The difference between a well-judged intervention and a bail-out lies in the details and in the protection offered to the taxpayer.
	Will the Chancellor, on the record today, give us his personal promise that as the man entrusted with the nation's finances, he believes that the guarantees are such that there will be no loss to the taxpayer? Would not the risk to the taxpayer be reduced still further if the Government had not agreed to indemnify securities backed by credit card debt as well as those backed by mortgages? Why has he done that? Perhaps he could explain that to the House, because we are trying to keep people in their houses, not prop up credit card lending. According to the market notice issued by the Bank this morning, the British taxpayer is underwriting securities based on United States credit card debt. Could the Chancellor confirm whether that is the case? Has he calculated the extent to which that will expose the taxpayer to developments in the US economy?
	The Chancellor is calling on the banks to be more transparent about their liabilities—I agree with him on that—but can he confirm that the Treasury has insisted that the scheme be designed to keep the taxpayer exposure off the Government's balance sheet? Is it true that the swaps are for 364 days because if they were for a day longer, £50 billion of debt would be added to the national debt? Crucially, what steps is he taking to ensure that the main lending banks will use the facility to pass lower rates to borrowers? Has he had any commitment from the banks that they will do that?
	We have seen the share prices of the banks go up since word of the scheme was leaked by the Prime Minister on his American trip, but what we have not seen is mortgage costs come down. The last time the Chancellor called for the banks to pass on a rate cut, they all ignored him, even the bank that he now owns, and several actually raised their rates. Let us hope he is more successful when he meets the Council of Mortgage Lenders tomorrow.
	Finally, do not the past nine months reveal the folly of a Prime Minister who failed to use the global good times to prepare for the difficult times? A competent Government would be in a position to help people with the rising cost of living. Instead, this incompetent Government's 10p tax rise will add to the misery of some of the lowest-paid families, who are already struggling with a rising cost of living, and could more than cancel out any help with mortgage costs that this scheme might bring. It is not too late for the Chancellor to back down and stop this tax raid on the poorest. We know from the climbdowns on capital gains tax and non-doms that this Chancellor is for turning. We know from his comments yesterday that he thinks the Prime Minister's last Budget was such a mess that he has to return to it. If the Chancellor has a concession to announce or if he wants to set out the process towards any concession, he should not leave it to his deputy; he should get up and have the courage to announce the concession at the Dispatch Box himself.
	The Bank of England is now playing its part to help families hit by the credit crunch, and it is time for the Government to do the same. It is time for the Government to stop fighting themselves and start fighting for the country. It is time for a Government who are on the people's side, not on people's backs.

Alistair Darling: I note that the shadow Chancellor had very little to say about the Bank of England scheme, just as he has had precious little to say throughout the past few months. Indeed, ever since these problems first arose in the financial markets last summer, what he has had to say has been contradictory. I note his invitation to discuss boom and bust—something that the Conservative party is well qualified to talk about. I prefer to remind the House that because we have a strong and stable economy, with low levels of unemployment and record levels of people in work, we are far better placed than most other economies to see through this period of financial uncertainty and turbulence.
	As for the hon. Gentleman's assertion that we are the only country affected, he must have noticed that banks and other financial institutions in the United States have been substantially affected. So too have banks in Germany and in other parts of the world. This problem is affecting the banking system throughout the world, which is why central banks and Governments have been taking action to try to alleviate it, with a view to getting the financial markets stabilised and returning to normality.
	The hon. Gentleman asked several questions. He asked about the Basel regime, and Basel II in particular. I am sure he would agree that it is important that the banks have adequate capital, and the Basel II agreement was meant to ensure that banks are properly capitalised, so that if they run into difficulties they have something to fall back on. Indeed, the evidence of the past few weeks is that several banks throughout the world need to improve their capital position.
	The hon. Gentleman asked how the banks will adapt from the present regime to the new regime, and the FSA is considering that. He also asked about the Bank of England scheme itself, which I understand he broadly welcomes. First, the issue of its classification is for the independent Office for National Statistics. Secondly, perhaps I may explain to him further how the scheme will work, although the Governor must have covered this ground in his helpful conversation yesterday. The Bank of England will make available Treasury bills to a bank in return for which it will have to pledge collateral. Most of that will be mortgage-backed securities, but it can include credit card assets, provided that they are AAA-rated, but in any event it will be for the Bank of England to decide what collateral it will accept.
	Crucially, as I think the hon. Gentleman acknowledged on the radio this morning, the Bank of England will ensure that it takes far more from the bank than it gives out in Treasury bills. An example is given in the Bank of England press notice today, which shows that if £100 of collateral is pledged, the receiving bank will get between £70 and £90, depending on the strength and value of the collateral. In other words, there will be a margin to protect the taxpayer. In addition, the banks will pay a fee.
	The crucial point is that the Bank of England is now able to take action to provide liquidity in the system for a longer period, which will help banks to restore their capital position and be able to start lending to businesses and individuals. That is crucial for this country in terms of improving the mortgage market. We want to ensure that institutions are sound, but we also want to see the benefits of what is happening passing to home owners, because they are entitled to expect not only support from lenders, but that will the Government to do everything they can to support them. We will continue to do that.

Vincent Cable: This is a strange day for a Labour Government. They are announcing that they are advancing billions of pounds to the banks at the same time as they are taking billions of pounds away from low-paid taxpayers. The Chancellor reminds me a little of a character whom I frequently encounter in the stories I read to my grandchildren—Little Red Riding Hood, who went around trying to be kind and helpful, but ended up being out-manoeuvred and then eaten by a wolf. [ Interruption.] The Chancellor is in the process of being slowly devoured by the British banking system. The banks are not in this position by some unfortunate accident. Their own Institute of— [ Interruption. ]

Mr. Speaker: Order. Hon. Members are entitled to get stories wrong from time to time.

Vincent Cable: The banks are not in this position by accident. The Institute of International Finance, which is the bankers' group, acknowledged only last week that the banks had engaged in substantial bad practice. British banks have, over the past few years, lent too much, too quickly and too carelessly. The correct course of action, which the markets now anticipate, is that the banks should make a rights issue to their shareholders to raise money to offset the losses that they have to own up to. The problem is that chief executives do not want to go to the markets because they face the sack, so they rattle the begging bowl to the Government and hope that the Government will help them out, which they are doing.
	The Government have assured us that they are covering risk as a result of the discounts on the transfer of assets. Can the Chancellor tell us what those discounts are? Only two weeks ago, the International Monetary Fund made an independent estimate that residential property in the UK was 25 to 30 per cent. overvalued. That is the IMF's estimate; it has no axe to grind. Any asset-backed mortgages that have a discount of less than 30 per cent. represent a transfer of risk to the taxpayer. As I understand it, the Bank of England will provide a discount of up to 30 per cent. but not beyond it. Will the Chancellor explain that discrepancy?
	The statement also says—this was confirmed a few moments ago—that the Bank of England will accept credit cards as part of the transfer mechanism. It is said that they will be accepted because they have a AAA rating but after the complete mess that the rating agencies have made over the past six months and the meaninglessness of the AAA rating designations, what possible confidence can we have in that assertion?
	My main point is this: if the Government are substantially to relax the conditions under which they make liquidity available to the banking system, surely conditions should be attached to that process. The most important condition should be that the banks accept up front and in writing that they will go to the markets to raise money in the way proposed by the Royal Bank of Scotland. Without that, there is no guarantee that the money raised in this way will not sit in the banks without being advanced to the markets, to small business or to residential borrowers. Without those guarantees, the package promises to be a liability to the taxpayer and to do little to sustain the domestic economy.

Alistair Darling: I always thought that part of the Liberal Democrats' problem was that they believed in fairy tales, but I had not understood that the hon. Gentleman did not know the ending of a fairy tale. I hope that when he goes home this evening he will apologise for misleading his grandchildren—inadvertently, of course—about the end of that nursery story.
	The hon. Gentleman's position in relation to the Bank of England's proposals lacks sense, too. The logic of what he is saying is that the Bank of England should not be providing the support. If these were normal circumstances, that would be a perfectly statable case, but these are highly unusual circumstances. We are in a situation, getting on for nine months after the problems first started, in which the mortgage bank security market is virtually non-existent. That is putting particular strain on banks and making them increasingly reluctant to lend to each other and to customers. That cannot be good for any of us as the problem spreads further into the wider economy. That is why I believe that what the Bank is doing is right. It is similar to what other central banks are doing.
	On banks that have got themselves into a position in which they need to recapitalise, I agree with the hon. Gentleman that it is important that they disclose their position as quickly as possible. The sooner the world knows the extent of the exposure, the more confidence there will be in our getting back to trading on a normal basis. Banks are doing that in this country and all over the world. However, the Government cannot say to every institution, willy-nilly, "You ought to have a rights issue," because that may not be appropriate for some institutions. When the hon. Gentleman thinks through the logic of his position, I think he will see that what he is proposing does not work.
	The Bank of England set out the securities that it will accept in the market notice that it published today, as the shadow Chancellor said. As I said in reply to him, it is up to the Bank of England to decide what securities it will accept and, crucially, what margin it requires in order to protect its interests—and, ultimately, the taxpayers' interests. The measures proposed by the Bank of England are necessary and will be beneficial in helping to get the banking system back into a position in which it functions normally. That will benefit businesses, individuals and mortgage payers in this country.

John McFall: I have a simple question for the Chancellor: does he believe in the principle of moral hazard?

Alistair Darling: I think that the principle of moral hazard is very important, but as I have said to my right hon. Friend on a number of occasions, I do not think that we can just stop there. We have a particular problem in relation to the banks. The banking system is crucial to just about every single business and individual, and to all home owners in the country; no Government could simply say, "It really doesn't matter what will happen to the banking system." It is crucial to the economy, as we have seen in the United States, as we see in Europe, and as we now see in Asia. There is not a country in the world that is not now being affected by the problem. That is why it is right for the Bank of England to take action, and why it was right to spend the past few weeks developing a proposal that I think will help to begin the process of getting back to normality.

Peter Viggers: This is further massive financial exposure by the Government. Will it count as Government debt, and if not, why not?

Alistair Darling: As I said to the shadow Chancellor, the classification of debt is a matter for the independent ONS. On the broader point made by the hon. Member for Gosport (Peter Viggers), as I have said, Treasury bills will be obtained by banks only in return for collateral. Let me make a general point: I know that both in the Treasury Committee and on the Floor of the House the hon. Gentleman has frequently asked perfectly pertinent questions about Northern Rock, as he was concerned about the exposure in that case. The Government did step in to stabilise the position at Northern Rock, but of course money has not been lost; indeed, Northern Rock's exposure and debt to the Bank of England are being reduced.

Stuart Bell: The Chancellor referred to low unemployment in his statement. Is he aware that between December last year and February this year employment rose in our country by 152,000? In the last financial year, it rose by 456,000, and 29.51 million of our fellow citizens are now in gainful employment. His theme today is stability. Will not his measures add to the stability of our economy and help our businessmen, citizens and consumers—all of us—overall?

Alistair Darling: The answer to my hon. Friend's question is yes, they most certainly will. The shadow Chancellor offered to give us a free lecture on boom and bust, but he might have recalled the difficulties that arise when there are 3 million or 4 million people out of work, and interest rates are at 15 per cent. That is what destabilised the housing market in the early 1990s. The position today is quite different. There are very high levels of people in work, and historically low interest rates. What we have to deal with at the moment is an almost unprecedented shock to the financial system, or certainly one that we have not seen in recent generations. It is important that we, and other banks, and authorities throughout the world, act together to do everything that we can to ensure stability in the banking system.

John Redwood: How much extra cash do banks in the UK now have to deposit or keep for prudential reasons, as a result of the regulator's change of rules? That will offset the beneficial effects of some of the package. Will the measures be enough to bring mortgage rates down?

Alistair Darling: In relation to the first point, the right hon. Gentleman is aware that the FSA is responsible for the prudential supervision of the banking system and specifying what arrangements are required, first under Basel I and then under Basel II, which is in the process of coming into force.
	In relation to the right hon. Gentleman's wider point about mortgages, we want to make sure that financial institutions are in good financial health, as I said in reply to the hon. Member for Twickenham (Dr. Cable). That means that some of them will have to restore their capital position. I believe that this is a way of helping to restore the position in relation to financial markets. I have made it very clear that, as most people in this country would expect, in taking action through the Bank of England—either in direct interest rate cuts or through today's support—the Government are entitled to expect that businesses, individuals and, in particular, mortgage payers will see the benefits of what we are now doing.

George Mudie: The Chancellor needs congratulating if he has got the Bank of England acting with some urgency at long last. However, the House needs to be reassured that we are not, as taxpayers, just bailing out the very same bankers who got us into this problem. I have noticed the financial conditions attached to the loan for the building societies and banks. However, are there other conditions that will force those institutions to pass on rate cuts, extend mortgages and the like—or will the money be used just to mend their balance sheets?

Alistair Darling: In reply to the latter point, it is not possible for the Government to insist that a cut in the bank rate, for example, should be passed through in every case, whatever happens. There may be reasons why a financial institution is not able to do that—not least because it may need to make sure that its capital position is strong. However, one of the reasons why, in the present position, the rate decreases have not been passed on, and why people have found getting mortgages more difficult or expensive, is that there is less money around because banks are not lending to each other. When we sat down to discuss how we could try to resolve the problem, we asked ourselves what was the root cause of that lack of funding and of the increase in the cost of getting loans, and it is the fact that the mortgage-backed security market is virtually shut. Sorting that problem out will begin the process of freeing up the lending process. That, I believe, will enable us to achieve the situation that we all want, in which people receive the benefits of that. It is not possible to prescribe in a mechanistic way what every single institution in this country must do, but, as I said, if public money is doing its bit, people expect banks to do everything that they can so that the general public can see the benefit.

Nicholas Winterton: I welcome the liquidity proposals that the Bank of England has announced today, but I remain concerned about taxpayers' exposure. Does the Chancellor think that the lessons of recent times will be learned by the banks and building societies, and that those institutions will stop indulging in irresponsible lending? Will the Chancellor and the Government play their part by not adding to the cost of living in this country through stealth taxation?

Alistair Darling: Banks and building societies should lend responsibly. They should be satisfied that the borrower can afford the loan being taken on, that the asset on which the loan is secured is good and that they will get their money back. I also agree that those responsible for running financial institutions should remember what has happened. What often happens is that the generation involved in one financial or banking crisis has long gone by the time something else happens. I hope that the memories of what has happened in the past few months stick not only with the current generation of managers, but with the rising generation. People need to learn from experiences, particularly bad ones.

Alan Simpson: I welcome the Chancellor's statement, although I recognise that it cannot be the place of a Labour Government to bail out a banking sector that has allowed itself to privatise profits and nationalise debt. Will the Chancellor spell out to the House that he intends to bring forward regulations for the banking industry that will, first, make it illegal for banks to conduct the off-balance-sheet transactions that have taken us into our current mess, and, secondly, require the full disclosure of the toxic debt that they are carrying? Is he confident that in the intervention in respect of access to mortgages, he will not be discriminating against the building societies that have remained in mutual ownership and in which people have saved, as opposed to those that converted to banks in order to speculate?

Alistair Darling: As I said, all institutions that are usually eligible for Bank of England support, including the building societies to which my hon. Friend refers, will be eligible in this regard as well. We are as mindful of their position as we are of that of other banks. I agree with what he says about the need for far greater transparency. There also need to be stricter rules in relation to off-balance-sheet activity, which has enabled some banks to get round their other regulatory responsibilities. That is clearly not a satisfactory position.
	In relation to my hon. Friend's first point, the important thing to remember is that this money, through these facilities, is effectively being lent, not given, to these institutions—they have to repay it. As I said, the collateral—the security—that they have to offer in return will be greater than what they get out of the system. This is helping to put money into the system so that it starts to work again, because if we do not do that there is a risk that the problems that we now see will spread even further and take much longer to recover from. That is why we are taking this action.

George Young: Is the rate of interest that the Treasury is charging the Bank of England on these bills less than the rate of interest that the Bank of England is charging the clearing banks, and if so, by how much?

Alistair Darling: The Bank of England is charging commercial rates, and we are providing funds to the Bank on that basis too.

Jim Cousins: I congratulate the Chancellor on getting the Bank of England to do now what it should have done last August at far less cost. Will the Bank of England require, in return for these loans, finance to be restored to home buyers? Will it also require the banks not to pay themselves bonuses for getting out of this mess on the same scale and style that they paid bonuses to themselves for getting into it?

Alistair Darling: Many people look at these bonuses and ask themselves what the individuals did to get them. In relation to Northern Rock, on which my hon. Friend has had quite a lot to say, that is a perfectly pertinent question to ask. This is not something that we can legislate for; at the end of the day, it has to be for companies themselves.
	I dealt earlier with the point about passing on the benefits of interest rate reductions to home owners. This action, which comes on top of other action that the Bank has taken independently or with other central banks, of putting money into the system, has helped. I do not think that last summer anyone would have envisaged that what we now see in the financial markets would have gone on for so long and be so deep in so many countries. It is important not only that action is implemented but that it works.

Stewart Hosie: I welcome the statement and thank the Chancellor for advance notice of it. I particularly welcome the international elements of transparency, co-operation and early warning. I give a guarded welcome to the £50 billion of Treasury bills and the changes to the use of credit ratings. The Chancellor spoke about the background against which these new measures have been developed. He spoke about liquidity and rightly pointed out that we have known about this for some nine months. Given that last August the Governor of the Bank of England knew about the difficulties that the credit squeeze was causing, given that on 4 September last year the inter-bank offering rate was higher than the Bank of England emergency rate, and given that on 6 September the European Central Bank pumped £150 billion-worth of liquidity into the system, does the Chancellor now regret allowing the Governor last September not to increase liquidity in the system? Is the real lesson for the future that in a future event such as this, early intervention will always be better than allowing things to drift on for eight, nine, 10 or 11 months?

Alistair Darling: My guess is that if we had introduced this particular scheme in August last year many people would have said, "Why on earth is this necessary?", because the extent and the depth of what has happened could not possibly have been foreseen at that time. As I have said before, certainly to the Treasury Committee and, I think, on the Floor of the House, by the time Northern Rock started to get into difficulties it would have been very difficult to help it through a general provision, because by that time it needed so much money that it was almost inevitable that it would come along to the Bank of England. The hon. Gentleman is right that it is always to our advantage to prevent such things from happening in the first place, if that is possible. That is why we will introduce legislation later in this Session, which I hope that he and his party will support, that was partly foreshadowed by the Banking (Special Provisions) Act in connection with Northern Rock.

Kevan Jones: I welcome the Chancellor's support for the banking system, but does he agree that it is important to look at what is happening in other sectors in the economy? Last Friday, I visited the Nissan car plant in Sunderland and met some of the 800 new employees who have been taken on to produce the new Qashqai car. That investment was secured because of a stable economy, but also because of a flexible and skilled work force who make the plant the most productive in Europe and one of the most productive in the world.

Alistair Darling: I agree with my hon. Friend, and the Qashqai has been extraordinarily successful. I know from my time as Secretary of State for Trade and Industry that the situation he describes came about partly because of the support that the Government were able to give Nissan, and because it recognised that we have a strong, stable economy and that the work force in the motor industry in the north-east is extremely highly skilled and motivated. Indeed, the number of cars being produced by the motor industry at the moment is more reminiscent of what happened in the 1970s. The industry has been highly successful.

Peter Bone: How is it that the Chancellor can find £50 billion at the drop of a hat, but unfortunately cannot alter his Budget to protect poor people who are losing money through tax rises?

Alistair Darling: To explain it in simple terms, the Government are effectively lending money through the Bank of England to the banks. In other words, that money has to be repaid, so the position is rather different.

Paul Flynn: There is money available—tens of billions—to fund the banks because of their own incompetence, and money was available, which will not be repaid, when we had an unplanned war against Iraq, so surely a Labour Government with a brilliant record of stealth socialism in their redistribution of wealth to the lower-paid for the past 10 years can find a mechanism to ensure that those who will lose out because of the abolition of the 10p tax rate will be compensated.

Alistair Darling: As my hon. Friend acknowledges, the Government have done a great deal for people during the past 10 years, particularly those on low incomes, and as I said yesterday, we will continue to do so. It is essential that we put in place the plan before us today because many people in this country, including those on modest incomes, depend on being able to get access to mortgages, and on mortgage payments being kept as low as possible.

Philip Hollobone: What is the Chancellor's preferred indicator for assessing liquidity in the banking system, and does he believe that the published London interbank offered rate accurately reflects the scale of the credit crunch?

Alistair Darling: Is the hon. Gentleman referring to the LIBOR rate?

Philip Hollobone: indicated assent.

Alistair Darling: The British Bankers Association is looking at that at the moment, which is probably quite a good thing for it to do.

Gordon Banks: The success or otherwise of the measures announced today will be seen in the economy and the banking industry in general, but I wonder whether the Chancellor has any formal process to evaluate the success of the measures during the three-year period for which they could operate.

Alistair Darling: Success will be demonstrated by the financial markets beginning to return to a stable position, so that banks begin to lend to each other again, which in turn will be reflected in it being easier for them to lend, and for people to borrow, whether we are talking about businesses or mortgages. There has been a substantial jolt to the system that will take time to work its way through, but the step we are about to take is an important one in that process.

Barry Gardiner: The Chancellor is right to address the lack of liquidity in the financial markets. Will he now consider the effect that the lack of liquidity might have on the utilities sector, which bears a collective £28 billion burden of debt? Has he spoken to utility regulators to ask why they continue to rely on rating agencies to fulfil their statutory duty to assess financial stability, despite their track record?

Alistair Darling: The scheme that we are considering applies to the institutions that can normally get support from the Bank of England. That would not include a utility company. Credit rating agencies should be perceived as a means of reaching a decision, whether that is for a bank, a utility company or anybody else. Their findings are not something definitive, which demands no further questions. The responsibility for running companies and making decisions about debt must lie, first and foremost, with their boards of directors.

Lindsay Hoyle: Anything that stops us going back to the 15 per cent. interest rates of 1992 must be welcomed in the House. However, what will be the pecking order for the banks in borrowing the £50 billion? Will UK banks come first or can foreign banks also borrow the money?

Alistair Darling: As I said, the facility is open to the banks that are normally here—British banks and those from abroad with branches here. From the discussions that the Bank of England has held, I do not think that there will be a pecking order problem. The Bank of England is fairly confident that the banks that want to take advantage of the facility can do that.

Philip Dunne: Banks have been reluctant to take advantage of overnight borrowing facilities from the Bank of England because of the opprobrium that attaches to that public borrowing. What makes the Chancellor so certain that they will be more likely to borrow under the facility that he has just announced rather than under the overnight facility?

Alistair Darling: As is fairly widely known, a long discussion has taken place between the Bank of England and banks in this country about what the scheme might resemble and whether banks might take advantage of it. I believe that most said that they would. The hon. Gentleman mentioned opprobrium. A feature of the scheme is that the Bank of England will not report on individual banks as and when they may look for facilities. It will report on an aggregate but, for obvious reasons, there is no sense in identifying individuals. My guess is that the scheme will be taken up fairly widely.

Points of Order

Gerald Howarth: On a point of order, Mr. Speaker. Following the recent Freedom of Information Act report released to  The Times last week by the Ministry of Defence on the humiliating abduction of Royal Navy and Royal Marine personnel by the Iranian revolutionary guard, I seek your advice on how to secure more transparent, accurate and timely information from the Government on the issue, which is obviously of great importance.
	According to an internal and unpublished Ministry of Defence report dated 13 April last year, the illegal abduction by the Iranian revolutionary guard navy took place in waters that are not internationally agreed to be Iraqi. However, the Secretary of State told the House on 19 June last year:
	"There is no doubt that HMS Cornwall was operating in Iraqi waters and that the incident itself took place in Iraqi waters."—[ Official Report, 19 June 2007; Vol. 461, c. 1266.]
	I am sure that you agree that it is important that Parliament be presented with the facts. It appears—it may not be the case—from the reports that the House was given information, which the Ministry of Defence has contradicted. Although there are Defence questions next week, the matter is so important to our foreign policy that I wonder whether you could advise me on how best I might seek information from a Ministry of Defence Minister.

Mr. Speaker: The hon. Gentleman has given me the solution to his problem by saying that there are Defence questions next week. He should ask those questions. It is up to Members of Parliament to seek clarification on all matters that come before the House and to ask questions. The hon. Gentleman should continue to ask questions, either written or oral, when he gets the opportunity.

Linda Gilroy: Further to that point of order, Mr. Speaker.

Mr. Speaker: I was telling the hon. Gentleman that it was not a point of order.

John Bercow: On a point of order, Mr. Speaker, on a different matter about which I seek your guidance. Given the weekend reports of further arrests, torture and killings that were undertaken in Zimbabwe—to the distress, I am sure, of hon. Members of all parties—at the obvious behest of the mass murderer Mugabe, and in the light of the Prime Minister's welcome public statements in the United States and elsewhere on the subject, have you had any indication that the Foreign Secretary intends to come to the House to make a statement about how, on a multilateral basis, we can achieve progress to bring that ghastly regime to book and ensure that the people of Zimbabwe have a better future?

Mr. Speaker: These matters should not be raised in points of order. It is up to Ministers whether they wish to come to the House. I think that we can leave it at that and not use points of order to raise such matters.

Orders of the Day

Finance Bill

[Relevant Document: The Ninth Report from the Treasury Committee, on the 2008 Budget, HC 430.]
	 Order for Second Reading read.

Yvette Cooper: I beg to move, That the Bill be now read a Second time.
	The Finance Bill implements measures from the Budget 2007, the pre-Budget report last year and the Budget 2008. There are three central areas in the Bill that I want to highlight: support for the economy at a time of global economic turbulence; the changes to the personal tax system; and the long-term reforms for the future of our country, particularly those addressing climate change. I will take each of those three areas in turn.
	The Bill supports the economy at a time of significant global pressures. As the Chancellor said in his statement a moment ago, a serious global credit squeeze is taking place, triggered by the problems in the US sub-prime mortgage market. At the same time, as families in Britain know well, world food and fuel prices are increasing, too. As a result, all economies across the world are likely to be affected this year.
	The British economy is well placed to weather global storms. Inflation is lower here than in the US or the euro area. As the recent labour market figures show, claimant count unemployment is now at its lowest for more than 30 years. Product, capital and labour markets have become more flexible and responsive as a result of the skills and competition reforms that we have introduced. That is why the independent International Monetary Fund has forecast that the UK will be the joint fastest growing economy in the G7 this year.
	However, resilience is not enough. We are doing more now to respond to the economic challenges that we face. So for a start, the Chancellor has today set out the steps that we are taking with partners across the world to help address the problems that have stopped banks from lending to each other. As well as the action to promote financial stability, supporting liquidity and monetary policy, the Budget sets fiscal policy to support the economy, too.
	The overall approach set out in the Budget and implemented through the Finance Bill is deliberately to put more money into the economy this year. We are using the flexibility that our fiscal rules give us to support additional borrowing in a sensible and sustainable way when the economic pressures are greatest. That is the right thing to be doing now. The overall impact of the fiscal decisions is to put billions more into the economy this year, through the automatic stabilisers and the decisions on things such as delaying the increase in fuel duty until October, which is implemented in the Bill. That is the right thing to do within the fiscal framework at a time when the economy faces global challenges.
	Thanks to our fiscal rules, we are able to protect investment at the same time. Previous Governments often slashed capital investment when economic pressures grew. We are protecting it, however, which means protecting investment for the future in our vital transport infrastructure, in our schools and hospitals, and in the underpinnings of the economic growth that we have sustained for so long.
	The Opposition have set out a rather different fiscal judgment—in fact, they have set out several, depending on their audience. First they say that borrowing is too high; then they set out ways to increase it further. In the past 12 months, they have set out £10 billion of unfunded tax promises. On Budget day alone, the shadow Chancellor set out proposals for borrowing an extra £5.4 billion, cutting inheritance tax except for millionaires, changing stamp duty and more. Six days later, after the Budget debates, the Opposition voted for an extra £10 billion in borrowing on top of that and against all the revenue-raising measures—on alcohol, on vehicle excise duty and so on—but for none of the tax cuts. Funny that. The Opposition have never told us where the money would come from or how they would make up their black hole—a black hole that just gets bigger and bigger.
	The Budget and the Finance Bill also support the economy in other ways, confirming corporation tax at 28 per cent. for this year and next—the lowest rate in the G7 and the lowest rate since the tax was introduced. The Bill also makes changes to the small companies rate to create a more level playing field, and introduces a new annual investment allowance to support capital investment.
	The Bill also increases research and development tax credits and makes the enterprise investment scheme—a tax scheme that supports small businesses—more generous. It restructures capital gains tax, creating a single rate of 18 per cent. with a new entrepreneurs relief. It implements more than 20 business tax simplification measures that were announced in the pre-Budget report and the Budget. So, the Bill supports the economy, simplifies the tax system to help businesses and provides overall support for the economy at a time of global pressures, while retaining a sustainable and responsible approach to the public finances.
	I want to turn now to the personal tax measures in the Bill. It sets out a major package of reforms to run alongside the changes made by the National Insurance Contributions Bill last year and the changes made to the tax credit system. These include the cut in the basic rate by 2p to 20p, its lowest rate for 75 years. They also include the removal of the 10p starting rate. They include increases in the tax allowance for pensioners, increases in the working tax credit for those in low-paid work, increases in child tax credits and, next year, child benefit to help families with children, and changes to the national insurance upper earnings limit.
	As the independent Institute for Fiscal Studies has set out, the poorest third of the population will benefit most from this package because of what we have done for pensioners, for families with children and for low-paid workers through allowances and tax credits. Indeed, the impact of the two Budgets and the pre-Budget report is to raise more than 500,000 children out of poverty. We should not underestimate the immense impact of this. When children grow up in poverty, it can disadvantage them for the whole of their lives. Lifting them out of poverty now could help them not only in the year to come but for decades into the future. As a result of these measures, households with children in the poorest fifth of the population will be on average £340 a year better off, and that will make a very big difference to them.
	Pensioners will benefit too—600,000 pensioners will be taken out of tax altogether—and the increases to the working tax credit will help low-paid workers without children. The working tax credit increases will mean that a single-earner household without children earning, say, £14,000 a year will be about £180 a year better off as a result of the Bill.
	I want to say more about those who will not benefit from this year's package. These are major reforms, and the majority of households will be better off or remain the same, although some will pay more as a result of the package. It is hard, in any one Budget, to help everyone, and those who lose in any one year might have benefited in previous years or might benefit in the next. If we look at the Budgets as a whole since 1997, we see that even those who are paying more in this year's Budget have still benefited significantly overall since 1997. So, on average, those who will pay more this year are still about £500 a year better off than they would have been under the 1997 personal tax and benefits system that the Conservatives left us with.

Philip Hammond: As the right hon. Lady has already cited the Institute for Fiscal Studies, will she remind the House what the institute's estimate is of the number of people who will be losers as a result of this package? Will she also remind the House of the Treasury's own estimate, as reported to the Select Committee?

Yvette Cooper: We have set out the figures. Four out of five households will be better off or see no change. One in five will pay more as a result of this year's personal tax package, but that does not take into account measures such as the extra given on the winter fuel package or the increases to the minimum wage. For example, the increases to the minimum wage over the past two years alone are worth about £13 a week to those on the lowest pay. We want to do more to help many of those who will not benefit from this year's package and we have already been working to achieve that.

Frank Field: Does my right hon. Friend accept that Labour Members in general fully support the Budget and the direction in which it is going, but that there are 5.3 million workers—including some in my own constituency and that of the Exchequer Secretary to the Treasury, my hon. Friend the Member for Wallasey (Angela Eagle)—who are worse off? Before we reach clause 3, as I think we will do next week, I hope that the Government will be able to find their way not to unstitch the Budget—nobody is asking that—but to bring forward specific proposals to ensure that those in work who are on the lowest pay are not made worse off by a Labour Budget.

Yvette Cooper: I welcome my right hon. Friend's support for the overall Budget and the fact that he is not asking the Government to reopen the Budget. I hope that he will understand quite how impractical that would be when people already have their tax codes for this year and are already paying tax and benefiting from tax credits as part of this year's proposals. He will also recognise that tax changes are part of a major package and that it is not always possible to help everybody in any one package; even those who may end up paying more as a result of this package will still be significantly better off on average than under the Conservatives' package of 1997.
	I would also say to my right hon. Friend that the Chancellor has said that it is his intention to return to this issue in future Budgets and the pre-Budget report and that he wants to look further into what we can do for those on the lowest incomes, just as we have in previous Budgets. That is why we have already made proposals for additional money to help those over 60 this year with winter fuel payments and also why we have provided further help with child tax credit and child benefit. Those will be part of a major programme of work that we shall be taking forward.

Several hon. Members: rose —

Yvette Cooper: Will hon. Members allow me to complete one more paragraph of my speech, after which I will be happy to take as many interventions as they wish?
	In the Budget report, we announced that we would begin a new programme of work on the next phase of tackling child poverty. We said that we would work with stakeholders, launching seminars and debates over the next few months, and begin pilot programmes on new approaches to help more children out of poverty. I can tell the House that we will now extend that work to include consideration of households on low incomes without children. Many without children have already benefited from things such as minimum wage increases and the working tax credit, but we want, as always, to do more for those on the lowest incomes, given the resources in the economy at the time. We will therefore consult stakeholders, MPs and different groups on the next phase of tackling poverty and unfair inequality in Britain. That work will initially feed into the pre-Budget report and then future Budgets as well.

Linda Gilroy: Nowhere more than Plymouth appreciates the importance of the economic stability that my right hon. Friend set out earlier in her speech, but she will know that I inherited from my Conservative predecessor the poorest ward in England. Although I can see from what she has set out that the net losers are considerably fewer than was put out by the press over the weekend, does she nevertheless understand that it is some of the youngest people in the constituency, who already feel undervalued, who are losing out? Will she look further into how they might be given a signal that they do matter?

Yvette Cooper: My hon. Friend raises the important issue of young people, for whom the changes in the minimum wage often make a particular difference. As I said, over the last couple of years, those changes have been worth £13 a week for those on low incomes and about £11 a week for the youngest age group. Although that has made a significant difference to their income, my hon. Friend is right that we are keen to do more to help younger workers who need investment in their skills to get the chance of a better job. Our overall approach across the Government has been to support people, through work where possible, but children and pensioners, of course, cannot go out to work. We have given particular additional support to them as well, on top of such things as the working tax credit, but I recognise the points that my hon. Friend has made.

Several hon. Members: rose —

Yvette Cooper: I will give way to many hon. Members.

Graham Stuart: I am extremely grateful to the Chief Secretary for giving way. Further to the question from the hon. Member for Plymouth, Sutton (Linda Gilroy), can the Chief Secretary confirm that the number in the press at the weekend—5.3 million people—is correct? Will she share that with the House today?

Yvette Cooper: Indeed, those figures have been published as part of parliamentary answers, but I say again that they have not included such things as the winter fuel payment, which is an important factor. I would also say to hon. Members that they might be interested to know that about half those households that pay more this year are in the top half of the income distribution. It is right to say, as the IFS has said, that we are providing the most support for those who are on the lowest incomes.

David Chaytor: While I fully accept and welcome the many positive proposals in the Budget, does the Minister accept that it is utterly perverse, given that a minority of households are losers, that they should be disproportionately represented among those just above the lowest income bracket?

Yvette Cooper: As I have just said, interestingly, the figures show that around half those who are paying more as part of this particular package are in the upper half of the income distribution, so in fact the distribution is rather different from how it has often been presented in the media. The IFS has made it very clear that those in the bottom third of the income distribution are the biggest gainers.
	Let us be clear: we have to recognise the fact that in any major package of reforms it is difficult to help every household, but that is why we look continually—in every single Budget and in every pre-Budget report—at what more we can do so that those who do not benefit in any one year may well be able to benefit in a future Budget or pre-Budget report.

John Bercow: The Chief Secretary has referred to the practical difficulties of making tax changes when the tax codes for this year are established, but she also referred to, and boasted about, increases in the national minimum wage. Given that the Government have announced increases—respectively for the adult and youth rates of 21p and 17p—to take effect from October, will she concede that in principle there is nothing to stop her raising the adult rate to £6 and the youth rate to £5 from October?

Yvette Cooper: I appreciate the fact that the hon. Gentleman recognises the increases in the minimum wage that have taken place. I suspect that he is perhaps one of the few members of his party who have not necessarily been adamantly opposed to the minimum wage throughout its history, as I know many of its members have been. Certainly, we take the advice of the Low Pay Commission in setting the minimum wage for the future and we shall continue to do so. We have a proud record of increasing the minimum wage.

Several hon. Members: rose —

Yvette Cooper: I need to make progress, but I will take an intervention.

George Mudie: I wish the Minister to see whether we can have a figure, even if it confirms the 5.3 million. That was the figure given last year by the IFS, but it has obviously been overtaken by the tax credit changes and so on. Is 5.3 million people still a valid figure or is it now outdated?

Yvette Cooper: My hon. Friend makes an important point, as the figure changes all the time because people's income changes all the time. That is the figure that we have confirmed as part of parliamentary answers—we have set out parliamentary answers in this area—but it is also the case that, with every Budget, further changes are made. For example, the winter fuel payment, which is not taken account of, is part of that. Also—

Madam Deputy Speaker: Order. I wonder whether the Minister would mind speaking into the microphone. The  Hansard writers would appreciate hearing her response as well.

Yvette Cooper: I apologise, Madam Deputy Speaker.
	My hon. Friend the Member for Leeds, East (Mr. Mudie) will also appreciate that there are changes to the winter fuel payment and such things as the minimum wage, which are obviously not taken into account as part of this. Of course, there will be further changes.

Several hon. Members: rose —

Yvette Cooper: I will take two more interventions. I hope that Members will appreciate that I must then continue my speech.

Angela Browning: At the beginning of March, I exchanged correspondence with the Financial Secretary to the Treasury about the 60 to 64-year-olds who would lose out. She wrote back to me admitting that there would be losses, but that they
	"will be relatively modest, at about £2 per week on average."
	Those losses will affect about 1.5 per cent. of people on low incomes, in some cases both people in a household. When the current Prime Minister announced the Budget, did he entirely disregard the people who would pay more tax this year than they did last year, or was this an omission that was not recognised at the time?

Yvette Cooper: The work of the former Chancellor, and that of the current Chancellor, has strongly supported pensioners. In fact, the poorest third of pensioners are on average more than £2,000 a year better off since 1997 as a result of the changes that we have introduced. This year we are increasing the winter fuel payment for the over-60s as well as the over-80s, and introducing a range of other changes such as free bus travel.

Jim Cousins: I understand that my right hon. Friend is trying to help the House, but does she accept that there are millions of low-paid losers who are not entitled to tax credits, and millions more who are but who do not claim them because their earnings change from week to week and they do not want to become enmeshed in overpayments? They face food, fuel and rent increases this week, or this month. They cannot wait for a package in 2009: they need it in 2008.

Yvette Cooper: Many of those families will be about £500 a year better off than they would have been under the tax and benefits system in 1997. It is right for us to continue to support households, which is why we introduced and increased the working tax credit to give additional help to, for instance, people with incomes of £14,000 or £15,000 a year. We have been working on the issue, and my right hon. Friend the Chancellor has said that he intends to return to it as part of his work on the pre-Budget report and on future Budgets. He wants to take into account not just those on low incomes with children, in whom we have already invested a considerable extra amount, but those with no children.

Philip Dunne: rose—

Frank Field: rose—

Yvette Cooper: I have already taken a large number of interventions, and I want to make some further points.
	These measures will build on the progress that we have made over the last 11 years. Overall, the lowest-income families are receiving much more help through lower taxes and higher credits and benefits than in 1997. In practice, for the poorest prisoners and families with children—

Patrick McLoughlin: On a point of order, Madam Deputy Speaker. Can you confirm that the debate can continue until any hour, which means that every Member will have ample opportunity to speak and the Minister has ample opportunity to give way as often as she wishes in order to clear the matter up?

Madam Deputy Speaker: I can certainly confirm that the debate can continue until any hour, but it is entirely up to the Minister—and, indeed, any other Member—whether to give way or not, regardless of the time factor.

Yvette Cooper: I believe that the right hon. Member for West Derbyshire (Mr. McLoughlin) is one of the few Members on the Conservative Front Bench who was not a member of the Bullingdon club, but that does not appear to have stopped him engaging in student politics.
	As I was saying, the Bill will build on the progress that we have made over the past 11 years—

Peter Bottomley: On a point of order, Madam Deputy Speaker. Is it in order for an ambiguous remark to be made that could encompass your response to the point of order properly made by my right hon. Friend the Member for West Derbyshire (Mr. McLoughlin)?

Madam Deputy Speaker: That is not a point of order; it is a matter for debate.

Yvette Cooper: Overall, the lowest-income families are benefiting by literally thousands of pounds a year as a result of the changes that this Government have made. The poorest third of pensioners are more than £2,000 a year better off than they were in 1997, and the poorest fifth of families with children are, on average, more than £4,000 a year better off. That means over £80 a week—cash that makes a real difference to those hard-pressed families, and cash that has, more often than not, been opposed by Opposition Members through their continual opposition to the tax credits system. Let us be clear about the crocodile tears we have seen from the Opposition—  [ Interruption. ]

Madam Deputy Speaker: Order. Yvette Cooper.

Yvette Cooper: Since when have the Opposition cared about those on low incomes? Since when have they cared about the 10p rate? Last October, when the shadow Chancellor made his big speech calling for tax cuts, did he say that his priority then was to restore the 10p rate? Of course not. Did he say then that he was worried about low-income households? Not a bit of it. What he talked about then was inheritance tax for millionaires. In his big speech on tax reform in February, did he say that he wanted to change the 10p rate? Not once. In his website call for action on Budget day this year, did he mention the 10p rate? Not once.
	What is the shadow Chancellor's policy now? The Conservatives would vote to keep the 10p rate now, but they will not say where the money would come from. They will vote to keep the rate, but they will not tell us whether they would restore it. The shadow Chancellor tells us about plenty of other taxes that he has promised to cut, but there is nothing on the 10p rate. They would vote to keep the rate, but now they admit that they do not even like it. The hon. Member for Runnymede and Weybridge (Mr. Hammond) said this weekend:
	"We would not necessarily re-introduce the 10p rate. We are quite happy with the idea of simplification."
	All the shadow Chancellor could say today was that he wanted to reopen the whole package. Perhaps the Conservatives could tell us whether that means he now thinks that we should stop the 2p cut in the basic rate.
	Once again this is shocking opportunism, and we will not take any lessons from the Conservative party on helping families on low incomes. That party opposed the minimum wage and even now still wants to opt out of the social chapter. Nor will we take any lessons from the party that is opposing the funding for the winter fuel payment this year and the child benefit increase next year.

Frank Field: I am very grateful to my right hon. Friend for giving way, and pleased that she is making the point that when we debated this matter last year, the Opposition sat on their hands and did not support the amendment proposed by Labour Members. She has said that the Chancellor will return to the issue in the autumn. I know that her hands are tied on this, but may I remind her that the House returns to it next week? Many of us want to know what the Government propose to do to ensure that 5.3 million lower-paid workers are not made worse off by the Budget.

Yvette Cooper: I say again to my right hon. Friend that the distribution of households that are paying more is rather different from how it has been portrayed in the media. It is clear that the lowest-income households are the ones who benefit the most. This is an area on which we continue to work and, following on from our work on child poverty, we will look at those people without children and what more can be done to support them. We will also take the views not simply of MPs, but of stakeholders and others.
	I want to return to the important point about the winter fuel payment, which is important for pensioners this year. In order to fund the additional winter fuel payment, as well as child benefit and child tax credit increases the following year, we are increasing alcohol duty as part of this Finance Bill. Over recent years, as incomes have risen, alcohol has become more affordable. In the supermarket, a bottle of wine costs around £4, whereas 10 years ago, the equivalent figure was nearly £4.50. The extra duty is worth only around 14p, so that bottle of wine is still cheaper than it was a decade ago. That is why this is a fair time to raise a bit of extra revenue from alcohol to help pensioners and families with children.

Philip Dunne: Will the Chief Secretary give way?

Yvette Cooper: I will if the hon. Gentleman can tell me why his party is opposing the increase in alcohol duty in order to fund that support for the winter fuel payment and child benefit.

Philip Dunne: I am grateful to the Chief Secretary for finally giving way. She has now mentioned the winter fuel payment nine times in her speech. She has just told us that it is being funded through a permanent increase in alcohol duty. Over what period will the increase in the winter fuel payment last?

Yvette Cooper: The Budget clearly sets out that we are paying for the winter fuel payment and also for the child benefit increase and the increase in the child tax credit in the following the year, so we are benefiting both pensioners and children through the increase in alcohol duty. The Opposition voted against that increase, so they are saying no to pensioners on their fuel bills this winter, and they are saying no to families with children on their increase in child benefit for the following year. Opposition Members have not been honest about that with their constituents, have they?

Rob Marris: I entirely understand the Government's position that such matters have to be looked at in the round, in terms of countervailing measures such as the increases in tax credits, age-related personal allowance and winter fuel allowance, and that therefore the 5.3 million figure is wrong, particularly in the context of the households to which she referred. If one takes into account such countervailing measures, and also that some households have a low-paid earner and a higher-paid earner, what is the net number of households that will lose—if there are any—because of the abolition of the 10 per cent. tax rate?

Yvette Cooper: The figures change, but we have set them out in parliamentary answers and they are that four out of five households will benefit or stay the same. One in five will pay more as a result of the package, but that does not take account of measures such as the winter fuel payment, because it is difficult to take account of such measures against the personal tax package.
	There is a further series of changes in the Finance Bill around inheritance tax and allowing married couples and civil partners to transfer unused inheritance tax allowances to each other, and there are also—

Linda Gilroy: Will my right hon. Friend give way?

Yvette Cooper: I have given way many times. The Finance Bill also makes changes to allow people who stay in this country for many years as non-domiciles to pay on a fairer basis. People come here from across the world to work, and we should continue to welcome them, but people who make their lives here should make a fairer contribution. That is why we are making changes in that regard. We are also making key changes—

Graham Stuart: On a point of order, Madam Deputy Speaker. Is it in order for the Chief Secretary to promise to take all interventions and then to refuse to do so? Is that procedurally correct?

Madam Deputy Speaker: That is not a point of order for the Chair. I have said this before, and I now repeat it: it is up to individual Members to decide whether or not to give way.

Yvette Cooper: Next year's Budget will also be the first to set out carbon budgets for the nation, following the implementation of the Climate Change Bill. That will make the UK the first country in the world to put carbon budgets into legislation. This year's Budget announced funding for the green homes service, but the Finance Bill particularly includes measures to promote more environmentally friendly cars, with changes to vehicle excise duty, and further announced changes will, of course, be implemented through next year's Finance Bill.

John McFall: As the Chief Secretary knows, it was the Treasury Committee that recognised that the 10p tax rate withdrawal would cause problems for many people; indeed, the Treasury official who appeared before the Committee last year mentioned that 5.3 million was the ballpark figure. In our report, we have asked the Treasury to look at that, but I will go one step further today and give the Chief Secretary and the Chancellor time to think about this before the end of the Second Reading debate tonight: I will ask my Committee to explore with the Chancellor and his officials who will lose out as a result of this 10p tax rate withdrawal and to look at any measures that could be implemented sooner rather than later to compensate them. I will ask my Committee members to look at that so that we can report back before June or July in order to inform the Treasury, in the hope that we can go a step further towards ensuring that we do not penalise poor people unnecessarily.

Yvette Cooper: My right hon. Friend knows that I respect immensely the work that he and his Committee have done. We would certainly welcome further work from it on this matter, and we hope that he will be a part of the work that we now want to take forward, looking not only at families on low incomes with children, but at families on low incomes without children. We would like to take that forward rapidly, with a series of further programmes of work with stakeholders, in order to report back in advance of the pre-Budget report and to look further at these issues. I would certainly welcome further discussions with my right hon. Friend, and I acknowledge his points on the need to make progress as speedily as possible in these areas.
	There are a series of further measures in the Bill to support the environment, as well as the wider work to provide additional support for the economy in challenging times and for millions of families. We shall continue to do more in all those areas, not just in the Bill but as part of future work. I commend the Bill to the House.

Philip Hammond: This Finance Bill is introduced against a backdrop of unprecedented uncertainty facing the British economy. Over the past six months, we have seen key leading economic indicators turn downwards, consumer and business confidence collapse, retail sales dip and the housing market turn. Millions of families and businesses are apprehensive about what the future holds for them.
	At times like this, people want a Government who are strong and unified, with a clear long-term strategy and a sense of purpose. Instead, they have a Government who are weak and disunited, fighting each other rather than fighting for Britain, dithering and indecisive, and focused on their own short-term problems. They have a Government who have lost their sense of where they are going and their will to go there.
	This Finance Bill is an opportunity missed. What the country needs today is a Finance Bill that will set Britain back on the right course. It needs a Bill to deliver a fair deal to hard-pressed families as the cost of living soars and earnings stagnate; to restore our business-friendly credentials, which the fiasco of the pre-Budget report did so much to undermine; and to set out a transparent process for future business tax changes and for proper consultation on them. The country needs a Bill to define clearly the scope of the rules and the processes for enforcing them consistently and fairly, and to reinforce the incentives for the investment and entrepreneurship that will deliver the jobs and prosperity that Britain needs for the future.
	What we have is a Finance Bill that exposes the legacy of the economic incompetence that has left Britain so ill prepared for the current uncertainty and given the Chancellor so little room for manoeuvre. He has so little room that he has to increase taxes on average families who like an occasional drink or drive a family car. The Bill leaves the business community still facing huge uncertainty about the detail of the non-dom taxation policy, which is now set out in schedule 7—a schedule that is so dense and impenetrable that even the experts tell us that they are baffled by it. By the Government's own admission, it is still so full of holes, six months after the PBR announcement, that it will require substantial amendment during the Bill's passage.
	In short, this is a Finance Bill that does exactly what we do not need at this point in the economic cycle. It raises taxes on households as the economy slows, the cost of living soars and the housing market teeters on the brink, fuelling the collapse in consumer confidence. It raises taxes on business at a time when our competitors are cutting them to support their economies, undermines investment and business confidence, and kicks families and businesses when they are down.
	It is typical of this Prime Minister that, at a time when the focus of attention in the Bill should be on supporting business and consumers and stimulating investment to keep the economy from slowing still further, the income tax measures announced in his Budget of 2007, when he was seeking to box in his successor, have dominated the debate. Perhaps it is poetic justice that when he stepped off the plane to confront the grim reality of home, it was his income tax reform that was fuelling the collapse of his authority and undermining his successor's first Finance Bill.
	It is typical, too, that the Prime Minister seems to be just about the only person who still does not get it and is still in denial that there is a problem. He still refuses to acknowledge his cynical sacrifice of the interests of the poorest to his own short-term political agenda. Opposition Members well remember the farce of the 2007 tax con Budget, and how Labour Back Benchers cheered the announcement of the reduction of the basic rate. What a coup to crown the then Chancellor's decade in the Treasury, and to launch his bid for the Labour leadership. How he basked in that achievement—for about five minutes.
	Then, it unravelled. Table A1 of the Red Book exposed the sleight of hand that paid for the tax cut with the abolition of the 10p rate. Then, the Institute for Fiscal Studies identified who the losers would be; the Chief Secretary to the Treasury apparently cannot say the figure, but I will: 5.3 million of Britain's poorest families. That figure was confirmed, give or take, in the Treasury's evidence to the Select Committee, and that is after taking account of the increases in tax credits.

John Redwood: My hon. Friend is making a very powerful case. Is it not even odder that the people who are going to pay this extra burden through the abolition of the 10p band are exactly those who are hit most severely by the surge in food and energy prices and by the further big hike in fuel duty when they want to travel in their car?

Philip Hammond: That is what makes the timing of this all the more poignant, and I suspect that that double whammy has focused the minds of many Members in this House.
	The thing is that the Prime Minister knew that his tax cut would be paid for by an increase in the tax burden of the poorest. The tax-cutting Budget became the tax con Budget, and boy, is the Prime Minister paying for his five minutes of glory.

Russell Brown: Can the hon. Gentleman explain to the House why members of his party sat on their hands when an amendment was tabled for last year's Budget?

Philip Hammond: We identified this problem in the 2007 Budget within an hour of the then Chancellor sitting down, and as I understand it, two amendments were tabled in the course of the following debate. One would have reduced the 10p tax rate to zero, costing the Exchequer about £16 billion, which is not a sensible or fiscally responsible way to address the problem. The other sought to put in place a long-term constraint on the Chancellor's ability to manoeuvre in future Budgets. Neither of those is the right way to address this problem. We have to deal with the issues in this Finance Bill, the Budget before it and the 2007 Budget, and we believe that that is the way to tackle these problems.

Ian Austin: If the hon. Gentleman expects anybody to take seriously his new-found concern for the poor and low-paid, can he explain to us why his No. 1 tax reform proposal is inheritance tax reform to benefit multi-millionaires such as the shadow Chancellor and the Leader of the Opposition, or the abolition of stamp duty on shares to benefit multi-millionaire City traders? Can the hon. Gentleman tell us which way he voted on the minimum wage, the introduction of tax credits and the introduction of the winter fuel allowance, all of which show that Labour has been consistent in delivering better standards of living for the poor and low-paid?

Philip Hammond: I appreciate that the hon. Gentleman may be the only Parliamentary Private Secretary left in the Government who is supporting the policy, but it is pretty unprecedented to have the Prime Minister's PPS on the Back Benches with a crib note, trying to intervene in this debate. I suspect that we on the Opposition side of the House are rather with Mr. Carter on this.
	If the Government want to talk about what happened in 1997, as the Chief Secretary to the Treasury did, instead of talking about the issues facing the poorest households in our society now, in 2008, then nothing demonstrates more clearly that they have lost the plot and the will to govern, and lost the way forward for Britain.

Several hon. Members: rose —

Philip Hammond: If I may, I shall press on.
	Once again, the man who likes to boast of his long-termism demonstrated the cynicism that has come to personify him, as he reversed a long-term policy objective for short-term political gain.

Ian Austin: On a point of order, Madam Deputy Speaker. Could you reiterate the answer that you gave to the Opposition Chief Whip about the speaker's right to take every intervention that is put to them?

Madam Deputy Speaker: I have indeed repeated this on more than one occasion, but I will do so again. It is up to every individual hon. Member of this House to make their own decision whether they give way for an intervention or not.

Philip Hammond: It seems that the Prime Minister's Parliamentary Private Secretary is trying to invent a new constitutional convention: that Prime Ministers' Parliamentary Private Secretaries must be allowed to intervene at any point in the debate on some kind of privileged basis. We would not encourage that.
	In case anyone has forgotten, Labour's 1997 election manifesto—that unfulfilled promissory note—promised, among many things, that Labour would
	"establish a new trust on tax with the British people."
	That was before the term "stealth tax" had even been invented. The manifesto continued:
	"Our long-term objective is a lower starting rate of income tax of ten pence in the pound. Reducing the high marginal rates at the bottom end of the earning scale...is not only fair but desirable to encourage employment. This goal will benefit the many, not the few."
	So said the 1997 manifesto, on which Labour Members sitting opposite were elected.
	That long-term objective was achieved in 1999, and was hailed by the then Chancellor, who said:
	"The new 10p rate—the lowest starting rate of tax in Britain for more than 35 years—will make work pay and help people, especially those who are low-paid, to keep more of the money that they earn...As a result...1.8 million low-paid workers will see their tax bills halved...a gain of up to £150 a year."
	That was what the then Chancellor said in April 1999. He concluded:
	"When we make promises, we keep them."
	Today, 5.3 million low-income households know that he does not keep his promises. The income tax burden of some of them will double because, by 2007, the long-term objective had apparently outlived its political usefulness, and the low-income households that had benefited from it were betrayed by the Prime Minister. What price now his moral compass?

David Taylor: I stand second to none in having great reservations about the loss of the 10 per cent. rate, which is why I am backing the amendment that will be put forward next week by my right hon. Friend the Member for Birkenhead (Mr. Field).
	Would the hon. Gentleman care to correct a canard that seems to have established a life of its own in recent weeks: that this particular change will fund the whole cost of the 2 per cent. reduction in the standard rate, which is about £7 billion or £8 billion? Some 5.3 million individuals or families will lose, on average, between £0 and £232—that is the most that can be lost—and £116 times 5.3 million is about £600 million. That is not even 10 per cent. of the cost of reducing the standard rate by 2 per cent.

Philip Hammond: I am happy to do so. I was to address precisely that point later in my speech, but I shall give the figures now. As the Chief Secretary to the Treasury knows, the Institute for Fiscal Studies has calculated that the total loss of those who are losers—the 5.3 million households—is approximately £766 million. That compares with the £9 billion cost to the Exchequer of reducing the 22p rate to 20p and, interestingly, with the £550 million that the Chancellor managed to magic out of nowhere between his pre-Budget report last October and the publication of his Budget this year to fund his climbdowns on capital gains tax and the non-doms regime. When they want to find the money, they seem to be able to do so.
	I also have some good news for the hon. Member for North-West Leicestershire (David Taylor), who has signed early-day motion 1052, and for all those hon. Members who signed early-day motion 1308. My hon. Friend the Member for Worthing, West (Peter Bottomley), who was one of the original signatories of early-day motion 1308, has re-tabled that early-day motion this afternoon, so that hon. Members will be able to reconfirm their support for the sentiments that it contains, as I am sure their constituents would expect them to do.
	Of course, everyone likes a tax cut, but how many hon. Members, on either side of this House, came into politics to increase taxes on the poor? There is almost universal consensus that that group is already overtaxed, but increasing taxes on the poor is precisely what we are being asked to do in voting for this Finance Bill this evening. How many hon. Members, and how many people in this country who will themselves be net beneficiaries of the 2p basic rate tax cut, feel comfortable knowing that that cut will be paid for by increasing the taxes of the lowest paid in our society? They include single people, childless couples on low incomes who are not entitled to tax credits, those who—for whatever reason—do not claim tax credits to which they are entitled, and elderly people under 65 living on savings income or pensions. Care workers, soldiers, postmen, call centre operators, security guards and hospital porters are all examples of the millions of ordinary working people who will be penalised.

Linda Gilroy: I am following the hon. Gentleman's remarks with great interest. Can he tell my constituents, some of whom live in the poorest ward in England—a legacy of the Conservatives—how he voted on the 10p tax rate in 1999, on tax credits and on the minimum wage? Unless he puts that information on the record, none of my constituents will be impressed by his new-found religion.

Philip Hammond: I would stop short of calling it a religion. A theme is developing, because the only way that the Government can think of to try to defend their position is to go back to a baseline of 1997. By implication, the Prime Minister is trying to say to people, "Look, don't worry about the fact that you will be £200 or £250 worse off this year as a result of the Finance Bill. Just remember that you had some good times in years gone by, so you shouldn't worry too much if we take this money away from you now." I have to tell the hon. Lady and the Prime Minister that that is not how people, especially those on low incomes, think or plan their lives. Those people need help now to deal with the hit being imposed on them, the scale of which many of them—and, I suspect, Labour Members—did not appreciate until very recently.

Gordon Prentice: Given that there will undoubtedly be losers as a result of the abolition of the 10p rate, what would the gentleman do to compensate those losers in the short term, rather than months down the line?

Philip Hammond: I am glad to note that the hon. Gentleman was one of the signatories of the early-day motion, and I hope that he will sign early-day motion 1340 at the earliest opportunity.
	We have made it clear that the message that we hope to send to the Government next Monday evening is that they have to go back to the drawing board and unpick this £20 billion package of income tax rates, income tax thresholds, tax credits and national insurance bands in order to mitigate the most negative effects—£766 million-worth—on the poorest families.

Peter Bottomley: I had three messages today. One was from someone whose son had become ill and she wonders how she will pay for prescriptions, one was from a pensioner aged 63, and one was from a woman who says that she has a few part-time cleaning jobs earning £6,500 a year. Her husband is in relatively low-paid work and she says that she cannot believe that a Labour Government can do this. In a non-party spirit, cannot the Government do something to help these hard-working or early-retired ordinary people?

Philip Hammond: I entirely agree with my hon. Friend's sentiments. My inbox has been jammed with e-mails and my postbag stuffed with letters from people—not necessarily my constituents—telling me how this change will affect them. Disbelief is the key theme. People simply cannot believe that Parliament can conceivably impose such a penalty on people who are on such low incomes.

Angela Browning: Is the situation not ironic whenever the Government foul up? I can only think that the impact of the 10p abolition on that group of pensioners was a foul-up, as the Minister has still not answered my earlier question. Was it a deliberate policy, and did the Government think that the loss to that group of very poor people of an average of £2 a week meant, in the Minister's words, "Just a modest amount", or does my hon. Friend believe that the Government fouled up and are now, as usual, looking to us to try to sort out their mess?

Philip Hammond: I must tell my hon. Friend—I think I have already said this—that I do not think that it was a foul-up. The then Chancellor knew precisely what he was doing. He was making a pitch for votes in a Labour leadership contest and he wanted to show that he could reach out to middle England, Blair-like, in the contest to come. He sacrificed the interests of some of the poorest in our society on the altar of his short-term political interests.
	The Labour-dominated Treasury Committee—we always describe it like that, but having heard what its Chairman has helpfully said today, I am not sure how relevant that is any more—put the point in its report on the 2008 Budget with masterful understatement. It said that
	"the group of main losers from the abolition of the 10 pence rate of income tax seem an unreasonable target"—

Ian Austin: Will the hon. Gentleman give way?

Philip Hammond: The hon. Gentleman has had enough of a turn today. He needs to scuttle back to No. 10. I hope that the purpose of his being here is to take the pulse and feel the mood. I hope that he will go back to No. 10 and tell his master what the mood is.
	Let me finish the quotation. The report stated that
	"the group of main losers from the abolition of the 10 pence rate of income tax seem an unreasonable target for raising additional tax revenues".
	The Prime Minister claimed that that was all done in the interests of tax simplification. The Conservatives are in favour of tax simplification, but we would not propose, nor can we support, a reform of the income tax system that is carried on the backs of the poorest. It is morally abhorrent.
	The truth is that the package had nothing to do with simplification. Why should it? Its author, after all, is the man who has doubled the length of our tax code and given us the most fiendishly complex tax system in the developed world. He simply does not do simplification. It had nothing to do with a long-term strategy either. Indeed, it undid that man's own long-term objective eight years after he had achieved it. As I have said already to my hon. Friend the Member for Tiverton and Honiton (Angela Browning), it was all about trying to convince the Labour party as it moved to choose its new leader that he could reach out, Blair-like, to middle England. He might have fooled them at the time, but if proof were needed of the extent to which the Prime Minister is out of touch with the British people, this debate delivers it.
	When the parliamentary Labour party met a few weeks ago and discussed the doubling of the 10p rate, a nameless Minister was quoted as saying:
	"Gordon did not seem to understand what they were talking about and kept insisting that nobody would lose out by the change. He...gave the impression he was living on another planet."
	Last week, the Prime Minister was not on another planet, but he was on another continent. He was still insisting that no one would lose out and he could not understand what all the fuss was about. The inner circle in the bunker with him remained in denial. The Minister for the Cabinet Office airily dismisses the fate of the 5 million people who are worse off as a result of the changes as a "matter of regret"—a minor piece of collateral damage in the path of the clunking fist. The Secretary of State for Children, Schools and Families apparently thinks that raising tax on the poor is part of the process of taking forward "the fairness agenda".
	Others understand; they get it. They come from all Opposition parties and from Labour, and include some Members on the Treasury Bench. The Lord Chancellor understands; so does the Minister for the Olympics. It appears that the penny is slowly dropping even for the Foreign Secretary. Perhaps even the Chancellor of the Exchequer was hinting last week in China that he understood. The hon. Member for Sheffield, Hillsborough (Ms Smith), who we are delighted to see in her place today, appears to have got the message. In her case, it was drowned out by another message that came across the Atlantic in a display of long-distance bullying that would put the Kremlin to shame. Those Members understand because they have been listening to their constituents, holding their surgeries and reading the letters and e-mails, as we all have, from people who are just working out what the Prime Minister's "simplification" means for them.

Several hon. Members: rose —

Philip Hammond: I will give way to the hon. Member for Wolverhampton, South-West (Rob Marris), but I will get my bonnet out of the way first.

Rob Marris: The hon. Gentleman will, of course, be aware of the question that I asked my right hon. Friend the Chief Secretary to the Treasury. The hon. Gentleman keeps quoting the figure of 5.3 million, but there are counterbalancing measures. He always does his research and he is careful with his figures; can he give the House the net number of households that will lose out? Most of us would agree that it is not 5.3 million, although we are concerned that there are losers.

Philip Hammond: I am afraid that on this occasion the hon. Gentleman has not done his research. The 5.3 million figure from the Institute for Fiscal Studies is a net figure.

Rob Marris: indicated dissent.

Philip Hammond: It is no good the hon. Gentleman's saying that it is not; it is a net figure. What is more, Treasury officials who gave evidence to the Treasury Committee gave a net figure of about 5 million, so I am afraid that the hon. Gentleman will have to go back to the drawing board.

John Mann: The hon. Gentleman is very precise in trying to outline the problem. Will he be equally precise in outlining a remedy? So far, the only solution that we have heard from him is the idea that there should be a review of the whole Budget. Does he propose getting rid of the 2p income tax reduction, and will he reintroduce the 10p income tax rate? If he will do neither, what precisely does he propose doing? So far, he has been strong on generalities but has not given any specifics.

Philip Hammond: As the hon. Gentleman signed one of the earlier early-day motions, I assume—

John Mann: rose—

Philip Hammond: I give way to the hon. Gentleman.

John Mann: The hon. Gentleman is now becoming inaccurate. Will he be quite precise about his remedy for the problem that he outlines?

Philip Hammond: As I understand it, the hon. Gentleman has reservations about the policy put forward by the Government. We want to work with Labour Members who have such reservations, and indeed with the Government. The Leader of the Opposition has made it clear that he is prepared to sit down with the Chancellor or the Prime Minister and try to sort out the mess into which the Government have got themselves.
	When the Chancellor wanted to climb down on the capital gains tax proposals and the non-doms part of his pre-Budget report last October, he was able to find £550 million. If he wants us to work with him, to look at the whole £20 billion package of income tax and national insurance changes, and to work out how we might mitigate the effect on the worst-off in society, we are happy to do that. Let me remind the hon. Member for Bassetlaw (John Mann) that we are scrutinising a Finance Bill. The Opposition's job is to consider each of the measures in the Bill and to vote against them if they are inappropriate and bad for the country. However, it is the exclusive prerogative of Ministers of the Crown to put forward new proposals that have tax-raising effects.

John Mann: The hon. Gentleman's party leader disagrees with him; his party leader says that it is for the House to make its decisions. The two of them have the opportunity to table amendments to the Bill. Precisely what amendments will the hon. Gentleman put forward, so that I and others in the House can consider and contemplate their worthiness or otherwise?

Philip Hammond: Procedurally, the hon. Gentleman is wrong; only Ministers of the Crown can put forward the type of amendment to the Finance Bill that he suggests be made, but we live in hope that amendments will be tabled to the part of the Bill that we are discussing—and not necessarily by the official Opposition. We will look carefully at those amendments. If the hon. Gentleman and his colleagues hold their nerve and focus on addressing the problem, rather than on trying to score party political points against those across the Chamber from them, we can win this one. We can send the Government back to the drawing board to think again.

John Mann: rose—

Philip Hammond: I will not give way to the hon. Gentleman again. I have given way to him three times in a row. We are not asking the Government to back down completely from their proposal; that is not realistic. We are asking them to go back to the drawing board, and to unpick the package and put it back together again in a way that mitigates the effect on the poorest members of our society. I think that that is what Labour Members who have concerns want.

Several hon. Members: rose —

Philip Hammond: I shall make a little progress, but I will take further interventions in a moment.

John Mann: On a point of order, Madam Deputy Speaker. For the sake of clarity, may I ask whether it would be in order for the official Opposition, or any Member, to table an amendment to the Finance Bill?

Madam Deputy Speaker: That would depend entirely on the wording of the amendment. The Table Office would give advice to any Members who wished to table such an amendment.

Mark Hendrick: Further to that point of order, Madam Deputy Speaker. Would it be in order for the Opposition to table an amendment, referring to this issue, that had already been tabled for Committee stage?

Madam Deputy Speaker: I repeat what I have just said. I cannot make a ruling on an amendment that is not before me. I have said that any amendments to be tabled will be guided by advice from the Clerks in the Table Office.

Angela Browning: On a point of order, Madam Deputy Speaker. Will you advise me? It is a long time since I have read "Erskine May", but does it have a section requiring that when a Government are in a mess such as this, it is somehow incumbent on the Opposition to table an amendment to get them out of the mess? Would that carry procedural weight in the House?

Madam Deputy Speaker: The hon. Lady is an experienced Member. Whether she has recently read "Erskine May" or not, I am sure that she is aware that it is open to Members to table amendments. It is open to the Government to govern, and to the Opposition to oppose.

Philip Hammond: Let us get back to where we are now.

Stephen Hesford: Will the hon. Gentleman give way?

Philip Hammond: No, I am going to make some progress, because I have already been speaking for half an hour.
	"Watch this space," the Exchequer Secretary said on Friday; I say to my hon. Friends that if we watch her space through to the next reshuffle, I fear that we may find it empty. Let us hope that she meant that, behind the intransigent bluster that the PM does so well, the backroom boys in the Treasury U-turn department were working over the weekend and yet another climbdown is in preparation—if not today, then before the debate in Committee next Monday. The Government found the money for concessions on non-doms and capital gains tax; they can look at the package and unpick it if they want to.
	I could make many other points about the Bill. The former Chancellor's Budget last year did not stop at the 10p rate for low-income families; when he had finished reversing his policy on the 10p rate of income tax, at the expense of low-income families, he reversed his policy on the taxation of small companies and announced an increase of 3p in the pound—hammering the very people whom he had encouraged just a few years earlier to incorporate their businesses with the now-abolished zero rate. The message is clear: people should not come here if they are looking for a stable and predictable fiscal regime for their business.
	Is the Prime Minister responsible for all the problems in the Finance Bill? That depends on who we think was the author of the pre-Budget report. The chaos and confusion that followed from the ill-thought-through proposals on the tail of the cancelled election last October have caused a huge problem in the business community and damaged Britain's reputation as a business-friendly environment and the Labour party's credibility with business even further. I could talk endlessly about those issues, but the mood of the House is to move on.
	I want to refer specifically to one more thing before I finish: the dramatic increase in powers being granted to Her Majesty's Revenue and Customs. Some tax experts are telling us that that is the single most important long-term aspect of the Bill. The pattern started with the Finance Act 2007, and without waiting to see how the new powers work in practice the Government have gone on to extend them to the whole range of taxes in this Bill.
	HMRC will be given powers to authorise itself to enter premises, including third-party premises. The safeguard on distraint of taxpayers' goods will be scrapped in primary legislation. There are constitutional questions around clause 117, which will create an order-making power to repeal or amend any primary legislation, including the Finance Act 2008 itself. These are huge new powers at a time when HMRC is miscalculating the taxes of 1 million or more of our fellow citizens every year, when public confidence in the chaotic administration of tax credits is at an all-time low, and when the shockingly casual attitude to data security has been exposed by the loss of the personal data of half the families in Britain. The Government's response is to give it more powers. This increase in powers is a step too far and a step too soon, and we will seek to postpone their implementation, if the Bill obtains a Second Reading, and to get them brought forward again in a stand-alone Bill that would be subject to scrutiny in the other place, which has expressed a strong interest in such bureaucratic powers.
	As the economy slows and we all peer into an uncertain future, this is the wrong Finance Bill to present to this House today.
	"We are where we are",
	as the Chancellor said on the "Today" programme on 13 March, and we all know who is responsible for getting us here, ill-prepared, over-borrowed and almost uniquely exposed—the same person who is responsible for most of the Chancellor's woes in this Finance Bill. At a time when families, particularly those on lower incomes, are struggling with the soaring cost of living and stagnant earnings, it clobbers them with tax increases. At a time when Britain desperately needs business investment to create the jobs and prosperity of tomorrow, it raises business capital taxes by 80 per cent. At a time when people crave certainty, it creates ambiguity, with arbitrary and sweeping new powers for the authorities and an unparalleled lack of clarity around some of its most important clauses.
	Most of all, this Finance Bill represents a breach of trust: with investors, who invested on the basis of Labour's long-term capital gains tax regime; with small businesses, who incorporated on the back of Labour's long-term small companies tax plan; and, above all, with the 5.3 million low-income households who were told by our Prime Minister, when he lowered their income tax in 1999,
	"When we make promises, we keep them."
	The weasel words that the Chief Secretary offered to the House will satisfy no one; they do not begin to address the Government's breach of trust with those on the lowest incomes in Britain. She goes on about 1997, talking about winter fuel payments that do not affect that group of people at all.
	Earlier this afternoon, we heard what the Bank of England is going to do to help Britain's hard-pressed families and businesses. Now it is the Government's turn. A promise is a promise. The Government need to go back to the drawing board and reconstruct their tax reform package so that it is not carried on the backs of the poorest in our society. Until they do, my hon. Friends and I, and I suspect many other honourable Members of this House, will not support this Bill.

John McFall: It is traditional for a Treasury Committee report to be tagged for debate on the Second Reading of the Finance Bill, so as Chairman of the Committee I am pleased to give a short speech on that report. The Treasury Committee's report on the 2008 Budget was published at the start of the recent recess and has been widely covered, but it was misrepresented in some quarters, not least in terms of forecasts. The Committee itself makes no forecasts for growth in future years, but we said that the outlook from the collection of independent forecasters indicated that the Treasury's forecasts were slightly optimistic.
	I will consider three aspects of the Finance Bill and its contents: first, the overall fiscal position; secondly, the measures to reduce poverty and the 10p tax rate; and thirdly, the scope and impact of measures affecting non-domiciled taxpayers. On the fiscal position, in many ways the Government's position is strong. Other than Canada, no G7 country has had a fiscal surplus in more years since 1997 than the United Kingdom, and compared with many EU countries our levels of public sector net debt are low. As a Committee, we understandably focused on the two fiscal rules that the Government have set themselves, and we highlighted two areas of concern. First, on the interpretation of the golden rule, we consider that it has been too closely linked to the timing of economic cycles, which has encouraged a position in which examination of the Government's overall fiscal position has been unduly focused on rather arcane controversies about the dating of the economic cycle.
	Secondly, the margins by which the Government expect to meet their sustainable investment rule relating to net sector public debt are tight, and seemingly highly dependent on the Treasury growth forecasts, which are at the top of the outside forecasts for growth in 2008 and 2009.

John Redwood: Does the right hon. Gentleman agree that if we add the unfunded pension liabilities, the PFI and PPP off-balance-sheet liabilities and the off-balance-sheet liabilities for Network Rail and Northern Rock, public sector total obligations are in excess of gross national product, at around £1.5 trillion? That is an enormous figure.

John McFall: As the right hon. Gentleman knows, the Treasury Committee comprises Members of all parties—his own, the Liberals and Labour. We have concluded that the fiscal position of the UK is strong in comparison to other EU countries.
	I want to focus on the measures to reduce poverty and on the 10p tax rate. The Treasury Committee considered the problems of marginal deduction rates and the impact of the abolition of the starting rate of income tax in the context of measures to reduce poverty. We welcome the increases in child benefit and child tax credit that are designed to achieve further progress on the Government's child poverty targets, and we specifically welcome the £1 billion that the Government found to fulfil those targets. As those on the Front Bench know, we were cautious about that because, in a previous report, we questioned whether the Government were resiling from their commitment. We were pleased to see that the £1 billion was included in the Budget proposals.
	We note the significant one-off increases to the winter fuel allowance, which should make all pensioner households better off in the tax year 2008-09, and which need to be built on by further measures in future years; those increases will help 9 million pensioner households. We also welcomed the maintenance of the 10 per cent. starting rate for savings for pensioners. Our concern about the abolition of the 10p income tax rate, however, is concentrated on households that do not stand to benefit from measures targeted on families with children, those seeking to return to work or pensioner households. We specifically said that those who do not gain from the measures on child poverty, fuel poverty and incentives to work would lose out, and we are talking largely about those on incomes of about £18,500 a year and less. We are talking about those who are under 60, who will not qualify for the winter fuel allowance; those with no under-18s in their households, who will not qualify for child poverty payments; early retirees; and those not claiming working tax credit, where take-up is low. The Minister will know that the tax credit take-up rate is about 19 or 20 per cent., which is scandalously low. I believe that £1.28 billion is available, and it is important that there is a campaign to increase the take-up rate. We cannot allow such a scandalously low figure to be maintained.

Russell Brown: Does my right hon. Friend agree that although the tax credit system has been a boost to the incomes of many households, any household that has fallen foul of the system will be reluctant to get involved with it again in case it receives an overpayment that has to be paid back? That does not act as an incentive; it makes people more than reticent about getting involved.

John McFall: My hon. Friend is right, but the Government have to be lauded for their intentions. Previously, we had a system under which we had to wait for more than a year to find out what people's earnings were, and then corrections would be made. The Government say that they will move to a system whereby things can change on a monthly basis so that we can encourage people to work. However, the bureaucracy gets in the way. People do not remind the Government of their intentions or report their earnings, or loss of earnings, and we end up with the situation we have seen in the past. We have to work on that, and I endorse a system whereby we ensure that people's income is reviewed on a regular basis so that they get the benefits they need. However, there are problems with the system and, as my hon. Friend knows, the Select Committee has been vigilant about that. We will ensure that we maintain that vigilance.

Kelvin Hopkins: According to the ombudsman, Britain is alone in having three different Departments that provide benefits—through local government and housing benefit, the Revenue and the Treasury, and the Department for Work and Pensions. Would it not be simpler if one Department provided all those benefits—a one-stop shop, which could be adjusted weekly or monthly according to need?

John McFall: I agree that that is a good concept. However, we are not nearly there at the moment and we must work with the system that we have. None the less, it is worth considering as a long-term proposal.

Philip Dunne: On tax credits, especially the marginal deductions for those who are seeking to get back into work and coming off tax credits, the problem is that the Budget increases the number of people who have to pay more than the 60 per cent. marginal rate of tax if they come off working tax credit and get into work. In the past 10 years, that number has grown from 800,000 to 1.8 million. Surely that trend is going in the wrong direction.

John McFall: The hon. Gentleman is a good and hard-working member of my Committee, but on the marginal rates of taxation he knows that, since tax credits were introduced in 1997, the 100 per cent. withdrawal rate has almost been abolished, and we are focusing on the 60 to 70 per cent. rate.
	I remember evidence from Mr. John Whiting of PricewaterhouseCoopers, one of our expert advisers on tax, who said that the high marginal deduction rates might be the consequence of the Government trying to achieve their social policy goals. He—and, indeed, Treasury officials—mentioned that the main reason for that was the extra help that the 2007 Budget introduced through tax credits. He said:
	"That brought more people into tax credits, the result being that more people then faced higher marginal deduction rates."
	On the one hand, we want to help people by bringing them into tax credits, but on the other, there are the marginal deduction rates. There is no doubt that there is an issue, to which the Treasury Committee will revert.
	However, the controversy about the removal of the 10p tax rate has highlighted the importance of the challenge for the Government to do more for those who slipped through the net of measures on child poverty and fuel poverty, especially by redoubling our efforts to make working tax credit take-up worth while for those in households without children.
	Ministers made the point about the number of people who are affected by the change. The Treasury Committee is clear about the matter. In evidence to the Committee last year, Mr. Mark Neale, the director of the budget, tax and welfare directorate at the Treasury, said that 5.3 million was the ballpark figure. We should all be straightforward and honest about that, identify the problem and state what we will do. I therefore reiterate my invitation to the Chief Secretary and others. I will put it to my members that the Treasury Committee examine the issue urgently and report back to the Treasury. I repeat that 5.3 million is a ballpark figure.
	The Treasury stated to us in evidence:
	"Estimates are that 0.8 million single earners with income under £18,500 will see their income decrease by around £1.45 a week on average...The maximum amount any single individual could be worse off by is £232 per year (£4.46 per week) about 3 per cent. of net income...For households that are worse off, the average loss is about £2 per week."
	The Treasury recognises that. Indeed, the Chancellor acknowledges it. In evidence to the Committee, he clearly said that it would affect women between the ages of 60 and 65. Let us therefore establish that people will be affected. People on low incomes will be affected and we need to find out who the winners and the losers are.
	One of the problems is identifying the winners and the losers. I have been asked in many interviews in the past few weeks why it has taken Members of Parliament a year to wake up to this matter. No specific information identified the winners and losers and one had to wait until the new arrangements were introduced in the Department for Work and Pensions—that happened last month. Before I was interviewed on one television programme, I tried to find out, through contact with representatives of the Department for Work and Pensions, exactly what the new measures were. They said that they would not be available until the first Monday in April.
	We got that information, from which I found out that, sure, a working household with no children with a combined income of £17,500 to £18,000 a year would lose about £13 a week, but also that in some instances single earners would gain. There is a fuzziness, and we do not know who the winners or the losers are. I refer the Minister to the Treasury Committee's clear recommendation in its report on the 2007 Budget:
	"An important part of any change to the personal taxation regime must be that both winners and losers can identify, with ease, how they are affected by the changes stated within a Budget package. We recommend that, in future, this information be provided within the Red Book."
	If the Government had indeed provided that information in the Red Book, we might not be having the highly charged debate on the issue that we are having today.

Betty Williams: Does my right hon. Friend agree that the media's claims that Labour Back Benchers have been silent on the issue for 12 months are misleading? Members like me were writing to the Treasury about the points that our constituents were raising with us on the issue 12 months ago.

John McFall: Yes, I agree.

Kelvin Hopkins: My right hon. Friend rightly talks about winners and losers. Would it not simplify the situation if the only losers were the very rich? They would pay more tax, which would not complicate the system, because they do not claim benefits, and no one on average or low incomes would need to be a loser at all.

John McFall: That is another of my hon. Friend's long-term objectives.

Eric Illsley: Over the past hour or so, my right hon. Friend has made the Government the offer that his Committee will look again at the 2008 Budget. I hope that those on the Front Bench will intervene to indicate that they accept that offer. May I impress upon my right hon. Friend the need to undertake that inquiry with some urgency, in order that the Government might have a vehicle through which to alleviate the situation in which many lower-paid taxpayers find themselves?

John McFall: I would be pleased to return to that issue as quickly as possible. As I have mentioned, the Treasury Committee has tracked the issue since last year, when the figure of 5.3 million people not gaining was given. We have been on the case for that year and we would all like a decent resolution of the problem, but it is for the Chancellor and the Prime Minister to respond.

John Mann: That figure was given to the Treasury Committee last year by Mr. Chote. He also said that the figure would come down over the 12 months, but could not say by how much. Has he given an update on what the precise figure is?

John McFall: No, 5.3 million is still the figure. I mentioned the winners and the losers. There are ups and downs and a nebulous element to the process. That is why we need to ensure clarity in the debate, so that we can show who the winners and the losers are. If the Committee undertook any inquiry, that is one thing that we would want to do.

John Mann: I thank my right hon. Friend for giving way again. I was not trying to minimise the issue for the losers; I was just referring to the evidence that Mr. Chote gave the Committee last year. He made it clear that the figure of 5.3 million would come down over the next 12 months. It would be helpful to have some proper quantification of the figure. Whether the figure is 5.3 million, 4.3 million or 3.3 million, the issue is still vital, but it appears that Mr. Chote has not provided any further information.

John McFall: There are in fact figures. I do not want to go through them tonight, but let me give my hon. Friend a feel for them. Some 2.2 million of the total will be single working people with no children who do not receive tax credits, while 1.2 million will be two-earner couples with no children and 400,000 will be households comprising one-earner couples without children, most of which will be in the range of about £17,000 to £18,500. There will be 700,000 two-earner couples with children who will lose twice because of income tax and national insurance changes, but who will perhaps gain only once through child tax credit or working tax credit. There will be 300,000 tax-paying women between the ages of 60 and 64 who do not get tax credits and who are too young to be compensated by the rise in pensioner tax allowance. There will also be 500,000 non-workers paying more tax on their taxable benefit and pensions than they gain. They could be early retirees or incapacity benefit claimants. We can see, therefore, how wide-ranging the impact of this measure will be. Those are the figures that add up to the 5 million; I am quite happy to share that information.

Several hon. Members: rose—

John McFall: I said that I was going to make a short speech, but the record will show that the interventions have taken longer than my speech so far, so I am being true to what I said at the beginning.

Graham Stuart: Many football fans get frustrated with supporters who turn up only when their team is winning. Does the right hon. Gentleman agree that the Labour party has the opposite problem, in that many of its members develop a conscience only when their team is losing?

John McFall: Absolutely not. We are on the park all the time. As I said, the Treasury Select Committee has been on the park on this issue for a year. We have not even taken a break at half-time and we have not had any Lucozade, so what is the problem?

Pete Wishart: The right hon. Gentleman said that he was looking for a solution to the issue of the 10p rate. Surely that solution will present itself next Monday when the right hon. Member for Birkenhead (Mr. Field) presents his amendment. If the Chairman of the Treasury Select Committee and his colleagues want a solution to this, all they have to do is support their right hon. Friend.

John McFall: That is utter nonsense. The fact is that 21 million people—four out of five people—will gain from the measures. It is typical of the Scottish National party to say that we can find a solution to the problem by creating further anarchy. We cannot do that; we have to be realistic and grown-up about this. The fact is that there is a taxation issue here in the Budget, and we need to be positive about it. Why do I want a solution? I want a solution because poorer people will be affected, and I would have hoped that the hon. Gentleman shared that worthy concept rather than warmongering and trying to create division. He is living up to his past, however, and he will probably continue to do so.
	I want to move on to better things. The only other measure that I want to talk about today is personal allowances for non-dom taxpayers. Public debate has focused on the issue of non-doms who will be required to pay the £30,000 charge, but many shorter-term non-doms will be affected by the removal of personal allowances, including many with quite small amounts of unremitted foreign income. There has been a focus on the wealthy non-doms, but almost none on the low and middle-income groups who will be affected by the changes.
	There is a serious risk that HMRC could face the problem of millions of foreign workers either seeking advice or being in breach of the new law. John Whiting, our adviser on the Select Committee, was very clear on the issue of low-income non-doms, and he said that millions of them could be affected. I am aware that the Treasury has estimated that there are 80,000 people with both a UK and a foreign income. That might be because it did not include the unwitting non-doms. The Treasury Select Committee report makes it clear that we feel there has been insufficient consideration of the possible impact of the tax changes in the Budget on middle and lower income groups, and we would like the Government to look at that.
	By far the largest group of people affected will be the lower and non-income professional workers. An example that has been cited are the typical Polish or Romanian migrant workers who pay UK taxes but who probably do not even know that they are non-doms because they do not know the term, and therefore do not realise that they are about to lose their personal allowance. They will certainly not have any advisers. That group could unwittingly be in breach of the new £2,000 limit for non-doms, and could therefore suddenly lose their UK tax-free allowance. We are asking the Government to be aware of that problem. More importantly, in the light of some of the recent comments about the capability of HMRC, we are asking HMRC to be aware of it. If it is likely to affect millions of people, HMRC needs to understand the problem that is coming down the line.

Philip Hammond: The right hon. Gentleman talks to the same kind of people as I do, and I am sure he will have heard that there is a mood growing among tax professionals that HMRC in fact intends to deal with this problem by turning a blind eye to the large number of low-income non-doms who will inadvertently become non-compliant. Is that the impression that the right hon. Gentleman has gained, and does he share my concern that that would be the beginning of a slippery slope?

John McFall: I shall refer again to John Whiting of PricewaterhouseCoopers, who has highlighted this point. In his evidence to the Committee, he said that HMRC had come a long way in terms of its engagement with business. This is still a live issue, however, because I am not sure whether HMRC is aware of the potential problem. It is that lack of awareness that I am trying to point out to the Minister. This applies to anyone whose foreign income could be affected, such as anyone with overseas savings of about £40,000, as the interest on that would be more than £2,000, which is the de minimis level. Equally, the measure could affect anyone renting out a property abroad or who has a summer job abroad. I want HMRC to look at this, because I have enough on my plate as Chairman of the Treasury Select Committee with all the inquiries that we carry out. I do not want to have to carry out an inquiry into this matter in a year's time, so will the Minister help me out by solving this before it becomes a bigger problem?
	I am willing to work with my colleagues in the Government on the withdrawal of the 10p tax rate in relation to low-income workers so that we can identify and compensate them, and so that we are not seen to penalise them unnecessarily. With that, I shall finish my short speech.

Jeremy Browne: There are two main ways in which a Member of this House can judge a Finance Bill, a Budget or, for that matter, a Government. The first is to ask whether the measure has a vision, a sense of purpose and a direction. The second is to ask whether it has what the Prime Minister calls a moral compass. That is the issue that has occupied us to the greatest extent so far today, and the one to which I will devote the largest part of my speech. It is the specific issue of the doubling of the 10p tax rate that is causing the greatest amount of grief and unhappiness among my constituents and among people right across the country.
	First, however, I want to touch briefly on whether the Budget had a vision or a sense of purpose, and whether it told us what the Labour party seeks to achieve and what drives the Government. In this debate, we have been discussing a change that was made in the Budget of 2007. The 2008 Budget has escaped without being given much attention at all because it was the most puny, unambitious Budget in living memory.
	During the parliamentary recess, I had the opportunity to attend a commemorative service in my constituency to mark the 40th anniversary of the assassination of Martin Luther King in Memphis, Tennessee, in 1968. During the service, I reflected that he had been a man of huge vision. He was an inspirational figure who had a dream and who had stood on the mountain top. He had seen the promised land. How diminished our politics seem by comparison today.
	The Labour party, which was founded just over a century ago, was founded for entirely noble reasons. Many people in this House, not only those in the Labour party, will conclude that the formation of the Labour party was to the benefit of the politics of this nation and the many people who live in it. The Labour party was out of government from when I was eight years old until just before my 27th birthday. During that period—from the earliest that I can remember through to my mid-twenties—many people worked in the Labour party to try to make it fit to govern this country again. Many people, including those on the Labour Benches, when they heard this year's Budget, will have been entitled to ask, "Is that it? Is that what it was all for? Is this what our great party has become?" It was the thinnest, most unambitious, managerial Budget that I can remember.
	Another notable American politician, Barack Obama, is fond of saying that politics is becoming smaller just as the issues are becoming bigger. That is particularly true in relation to this Government, who seem to have no purpose or sense of direction left. Yet there are a number of visionary causes that they or any UK Government could adopt. After a massive expansion over the last decade, the Government are now spending £1,700 million every single day—in fact, the Government's daily expenditure is now more than the entire expenditure of the Foreign and Commonwealth Office for a whole year.
	As I say, there is no lack of issues for the House and the Government to get to grips with; the question is not "How much?" but "How?" We are no longer in the area of talking about whether taxes and public spending can be endlessly raised; rather, we are in the area of talking about how we can spend that money more efficiently and achieve better value for money on behalf of all our constituents in order to achieve the objectives that we all share. The primary domestic objective must be to make public services more accessible and more accountable. How can we, as a group of politicians, ensure that people of all incomes can be empowered to shape their own lives? The big domestic challenge of the 21st century is to create health and school systems that are fit for our times—not just through extra public spending, but through meaningful reform.
	Of course, the greatest challenge of all facing politicians of our era is how we can protect our planet from ruinous climate change. There is clearly an agenda there for a Government who have vision, a sense of direction and a sense of purpose—a Government who can grasp the scale of the threat and the opportunities and who have the imagination to respond.

Stephen Hesford: The hon. Gentleman is talking about vision, so has he not heard of the Climate Change Bill, which is going through the House? How does that Bill square with the idea of the Labour Government not doing anything about climate change? I simply do not understand the hon. Gentleman's point, as we are the only Government in the world to introduce a Bill to deal with climate change.

Jeremy Browne: I did not claim in my opening remarks that the Government had done nothing at all; I said rather that the scale of their ambition was far too puny, timid and lacking in ambition. That is very much true of the Climate Change Bill; in fact, I could not have come up with a better example if I had sat in my office and given considerable thought to the matter. That Bill is a proposal put forward by a Government who have been in office for 11 years, during which time the issue of climate change has become considerably more acute. It would be fair to say that my party was talking about environmental issues to a greater extent than the other parties in the 1997 election and before, but the Government have put this proposal forward and made some progress. The Bill, however, does not go far enough. Instead, we had a Budget that confirmed how small and how visionless Labour in government has become. If I were a Labour Member, that—beyond any specific proposals in the Budget package—would depress me most: the sense that the momentum of the whole exercise and the entire reason for being in government have come to a halt. The Government are petering out, running out of ideas for the future of this country.

Rob Marris: May I suggest that the hon. Gentleman is simply in the position of not sharing the Government's vision? There is a Government vision. The hon. Gentleman talks about the NHS; there is a Government vision based on more autonomy for hospitals, foundation trusts, "choose and book" and so forth. The Government have an agenda on school education, which involves empowering parents, as recent announcements show, and they have an agenda on what goes on in schools and further education colleges—training, diplomas and so forth. There is also a Government vision in respect of higher education and—

Mr. Deputy Speaker: Order. That is sufficient for the time being.

Jeremy Browne: I am grateful for that intervention. I would not disagree that there is a list of Government policies, but I would disagree that they amount to a vision. I was not present at the parliamentary Labour party meeting—obviously, because I am not a member of the parliamentary Labour party—but I heard reports, which the hon. Gentleman might like to confirm, that Labour Back Benchers told the Prime Minister that they did not know what he stood for. At least with Tony Blair as leader, people felt that there was a sense of direction; they may not have liked it, but they were not left confused about what the Government were trying to achieve. Many people in the Labour party and beyond it no longer know precisely what the Prime Minister and the Government stand for.
	That brings me on to my second and larger point, which is the Government's moral compass and the doubling of the 10p tax rate that was in the Budget of March 2007. People in my constituency and elsewhere are entitled to ask what took Labour Back Benchers so long. Seventy three Labour MPs have signed early-day motions critical of the change, but the Budget was on 21 March 2007—precisely 13 months ago today—when the Government Benches were full of Labour MPs waving their Order Papers and braying at the electoral triumph just laid before them by the man who is now the Prime Minister. It has taken them an awfully long time to look at the details of the Budget.

Russell Brown: Perhaps the hon. Gentleman should not read too much into the number of Members who have signed early-day motions. I, for one, have not signed an early-day motion on this matter, but I can assure him that within two to three weeks of last year's Budget, I was sitting at a table with our Prime Minister, then Chancellor of the Exchequer, expressing my severe reservations about the announcement.

Jeremy Browne: We "Browns" must stick together to ensure that the main "Brown" is put in his place.  [Interruption.] I keep hearing sedentary interventions, asking whether the hon. Gentleman was satisfied with the conclusion of his negotiations with the current Prime Minister. I will gladly give way to him again if he will tell me whether he feels that the current arrangements are to his satisfaction.

Russell Brown: If the hon. Gentleman hangs around and I manage to catch Mr. Deputy Speaker's eye, he may well hear what I have to say about that.

Jeremy Browne: That sounds a tantalising prospect. The next four hours will fly by.
	I remember that, on 21 March 2007, the Labour Benches were awash with a sense of euphoria that the then Chancellor had paved the way to Downing street with no contest, as no one would stand against him. The leader of the Conservative party rose to his feet—we have to remember, of course, that my constituents pay more in their taxes for the salary of the right hon. Member for Witney (Mr. Cameron) than they do for any other Opposition MP, so we are entitled to think that he will stand head and shoulders above us all in respect of his ability to analyse the Budget—but unfortunately, he did not notice the doubling of the 10p rate. In fact, in the first line of his speech, the leader of the Conservative party said the following words on behalf of the 5.3 million people who were losers in the Budget:
	"Well, the Chancellor has finally given us a tax cut."—[ Official Report, 21 March 2007; Vol. 458, c. 829.]
	That was his analysis.

Philip Hammond: Just for the record, the reason my right hon. Friend the Member for Witney (Mr. Cameron) did not notice that is that it did not appear in the Chancellor's speech. We had to get the Red Book and plough through its tables to understand precisely the sleight of hand that the Chancellor had used.

Jeremy Browne: I am grateful for that intervention, which brings me perfectly to the next speech that was delivered on that occasion, which was by my right hon. and learned Friend the Member for North-East Fife (Sir Menzies Campbell), the then leader of the Liberal Democrats— [Interruption.] Indeed, he is not our leader now, but he made a speech that would have informed both Labour and Conservative Members if they had taken the opportunity to listen to it. If you will indulge me, Mr. Deputy Speaker, I will cite what he said at some length. In the same debate as the leader of the Conservative party welcomed the tax cuts, my right hon. and learned Friend said:
	"The Chancellor told us as he sat down, to waves of applause, that he would cut the basic rate of income tax from 22p to 20p. On the face of it, that is a Liberal Democrat proposal and a welcome one. But if one looks carefully, one sees that the revenue to justify that reduction will be obtained from the abolition of the 10p rate. To fund the reduction, income tax will be increased for many taxpayers. One could say that we will be asking the poor to subsidise the rich. That is an example of the sleight of hand that the Chancellor has demonstrated in the past."—[ Official Report, 21 March 2007; Vol. 458, c. 834.]
	 [Interruption.] I hear sedentary interventions once again, but there is a difference between being the official Opposition and being an effective Opposition; just being numerically superior in the House of Commons does not make Members more able to stand up on behalf of their constituents.  [Interruption.] We will come on to the Conservative party in more detail in a few moments, as its tax policies deserve greater scrutiny.

Philip Hammond: Just for the record, there is also a difference between having to respond to the Chancellor from the moment he sits down and responding to him after having had the benefit of perusing the Red Book for half an hour.

Jeremy Browne: If the Conservatives cannot stand the relative heat of being a smaller Opposition than Michael Foot was able to muster, they are obviously not quite the Government in waiting, as they have come to style themselves in recent weeks.
	Let us go back to 21 March 2007. Labour MPs, who were hugging themselves with joy because their re-election had been confirmed on the backs of more than 5 million people who were losing out, rushed off to the Tea Room to gossip excitedly about what had just been announced. As a matter of courtesy, as well as of self-preservation, they would have been well advised to stay and listen to the leader of the Liberal Democrats. Of course, the London media commentators in the Gallery all rushed off as well, back to their computers. As a result, the warnings that the Liberal Democrats gave on Budget day, within minutes of the Chancellor sitting down, were not heeded by those Labour MPs, media commentators and others.
	The media continue to describe those who are losing out under the March 2007 proposals, which are just being implemented, as low earners. Low earners are affected, but not just low earners. In many communities around the country and in constituencies such as the one I represent, a salary of up to £18,000 does not constitute low earning, although it may sound like low earning to some in the London media commentating classes. Such wages are typical in places such as Taunton, in Somerset and right across the country. Right across my constituency, people such as farm labourers, hotel receptionists and those who work in service industries are adversely affected by the proposals that are being introduced.
	People in the House and elsewhere should not delude themselves that we are talking about just a small number of people who are marginally oppressed. We are talking about millions of people who are contributing to the community in every constituency represented here.

Brian Binley: I am most grateful to the hon. Gentleman for giving way, because I wonder whether he can explain why that paragon of virtue—that quick-on-the-draw man—was rejected by his party as leader and why he is not standing here now, continuing with those great virtues. Did the hon. Gentleman support that particular paragon of virtue?

Jeremy Browne: I did, although he chose to relinquish his post. However, it reflects well on our party that we have managed to find another person of equal talent—some would say even greater, but that is for other Members to conclude.
	I am confident that at the next general election, when the leader of the Liberal Democrats, assisted by my right hon. and learned Friend and others, puts his case to the electorate, the voters of this country will not be impressed by a Labour Government who have left more than 5 million people on low and low to middle incomes worse off.
	The Prime Minister is now in a state of absolute denial about the effect of his changes. According to reports that I hear second hand—I am happy to take interventions from Labour MPs on this—he is telling the parliamentary Labour party that nobody will lose as a result of the changes made in his final Budget, when we know, and as has been confirmed this afternoon by the Chairman of the Select Committee on the Treasury, the right hon. Member for West Dunbartonshire (John McFall), that more than 5 million people will lose as a result of the changes announced in 2007. No wonder Lord Desai, a distinguished economic commentator on the Labour Benches in the House of Lords, said:
	"Gordon Brown was put on earth to remind people how good Tony Blair was".
	We have a complete disintegration of discipline in the Labour party. We have the Prime Minister, waiting in an anteroom in the west wing of the White House for his audience with the most powerful politician in the world, having to divert his attention to emergency phone calls to a Treasury Parliamentary Private Secretary—not a PPS from another Department, but a PPS from the relevant Department—so that he could plead with her, "Before I have an audience with George W. Bush about issues of global magnitude, please, please will you not embarrass me by resigning as PPS to the Chief Secretary?" It is a pitiful state of affairs.
	The hon. Member for Sheffield, Hillsborough (Ms Smith) was not the only rebellious PPS—we have a full-scale revolt: the hon. Members for Sittingbourne and Sheppey (Derek Wyatt), for Blaydon (Mr. Anderson), for Barnsley, East and Mexborough (Jeff Ennis), for Hove (Ms Barlow), for Stafford (Mr. Kidney) and for Ealing, North (Stephen Pound), and, no doubt, many others, whose unfavourable comments I have yet to read in the newspapers. The Chancellor used his Budget to tell us that he would crack down on carrier bags; the Labour Chief Whip is now having to crack down on the bag carriers.
	It is an extraordinary state of affairs that it has taken Labour MPs so long to realise the consequences of doubling the 10p rate. That proposal was not only in last year's Budget, which took place on 21 March 2007, because only a month ago, on 18 March 2008, during the Divisions in the House on the Budget resolutions, we yet again had a vote on the 10p rate. The Government's position was carried with the support of precisely those Labour MPs who are now making such a fuss, because, as I understand it, they had not then had the opportunity to talk to their constituents and they had not canvassed for the local elections.  [Interruption.] As is being said from a sedentary position, it is amazing what an opinion poll or two will do to refocus minds and allow people to rediscover their consciences.

Rob Marris: I am grateful to the hon. Gentleman for his generosity in giving way. I am a PPS and I have expressed reservations to the Government. I did so in the House on 30 April last year.
	I caution the hon. Gentleman. I take some of his points about equality and fairness for the lower-paid, but before he goes too far down this line, he should remember that two years ago his party was making proposals for swingeing increases in green taxes, some of which would be counterbalanced by drops in other taxes. The hon. Member for Eastleigh (Chris Huhne), speaking for the Liberal Democrats on those matters, made it quite clear that green taxes would be ratcheted up and up and up. Given that those measures would have been there to change behaviour, they would have affected the lower-paid badly.

Jeremy Browne: I do not want to go too far off the beaten track, but the point that we have consistently made, and which the Government have not heeded, is that there will be public support for environmental taxation only if that taxation is offset by reductions in other taxes, most notably income taxes.
	I am in a strange position. I took an intervention from one Labour Back Bencher, the hon. Member for Wirral, West (Stephen Hesford), who said, "Look at our environmental credentials; they are greater than you claim they are," and I am now hearing that the environmental credentials of the Liberal Democrats are excessively ambitious. Yet again, the lack of any sense of purpose and direction in the Government becomes obvious.
	I was listening to Radio 4 on the evening of Friday 18 April, and when asked what would happen as a result of the growing rebellion in the Labour ranks over doubling the 10p rate, a Treasury Minister said, "Watch this space." Well, we watched it today, and unless I missed something the Chief Secretary said no changes were possible. In fact, over the weekend, she took to the airwaves to damp down any speculation that that other Treasury Minister might have been suggesting or hinting at imminent changes.
	Labour MPs need to realise that there is no great salvation coming from the No. 10 bunker; they are on their own. In the bunker, all is dither and meltdown. If they want to save their lower and lower to middle income-earning constituents from taking a big tax hit precisely when their food and other bills, council tax and fuel bills are going up, that will not be achieved by this Prime Minister and this Chancellor. Labour MPs will have to act alone to try to represent the interests of their constituents.

Russell Brown: I thank the hon. Gentleman for giving way once again. If Labour Members are looking for some kind of saviour and an answer to the issue, we did not get one from the main opposition party. Can he give an indication of what his party would do? I honestly believe that this issue is far more complex than some individuals understand.

Jeremy Browne: I am again grateful for an extremely helpful intervention, because it is my party's policy to reduce income tax rates on the lowest earners. Hon. Members must remember that the Labour party and the Conservative party are committed to offering identical levels of taxation at the next general election. I hope that my party will have the scope to offer even more than we already propose to help some of those people on the lowest incomes in this country, who in my view are paying far too great a proportion of their income in taxation.
	The hon. Gentleman has also brought me neatly to the Conservative alternative to the proposals in the Bill. As I said earlier, the Conservative party leader did not notice the doubling of the 10p rate, so I must rely on quotations from other Conservative Front Benchers for guidance.
	On 16 April, while the House was in recess, the shadow Chancellor of the Exchequer in a national newspaper wrote:
	"I would stop the tax rises on families."
	But we know that he will do nothing of the sort, because the Conservative party is committed to precisely the same levels of overall taxation as the Labour party. In fact, the Conservatives have two criticisms of the Labour Government: the first is that they tax too much, spend too much and waste too much, and the second is that they have not done what the Conservatives would do, which is exactly the same. The Conservative party and the Labour party have morphed into a single entity. Every time the Conservatives criticise Labour tax rises, we should remember that they must have a secret extra tax rise in mind to make up for the one that they are criticising.
	The Conservatives feign concern about those who will be harmed by the doubling of the 10p rate, but at the Conservative party conference last autumn, what was the party's main priority for helping those who were struggling with their tax burden? Was it helping the people on the lowest incomes—the people whom I mentioned earlier, the farm labourers, hotel receptionists and hospital porters cited by the hon. Member for Runnymede and Weybridge (Mr. Hammond)? Was it single people under the age of 25 on modest incomes? No; they were completely ignored by the Conservatives. Was it pensioners between the ages of 60 and 64, who will be adversely affected by the Government's proposals? No, it was not them either. The group singled out for special assistance by the Conservative shadow Chancellor—

Graham Stuart: First-time buyers?

Jeremy Browne: —were people who owned houses worth around £990,000 to £995,000 and had paid off their mortgages. Those people were considered to be a more deserving target for the largesse of the Conservative party than people, in my constituency and elsewhere, on incomes of £11,000, £12,000 or £13,000 a year.

Graham Stuart: What about first-time buyers?

Jeremy Browne: Many members of the shadow Cabinet bought their first house for about £1 million, but they are not entirely typical of the people whom I represent, although they may be entirely typical of the people at the dinner parties attended by the shadow Chief Secretary of the Treasury. It was the shadow Chief Secretary, who is so out of touch not just with public opinion but with the mood in his own party, who said recently that the Conservative party would not be able to introduce any tax cuts until 2015. Unfortunately, over the recess he was overruled by the shadow Chancellor, who indicated that it might not be possible to reduce the tax burden until 2018 at the earliest. No wonder the chairman of the Conservatives' own tax commission, the former Cabinet Minister Lord Forsyth, said only last week that the Conservative tax policies were "mad".

Stewart Hosie: I intervene only for the sake of clarity. I am quite enjoying the hon. Gentleman's speech. Can he tell us by what proportion of gross domestic product Liberal Democrat tax policy would reduce overall taxation?

Jeremy Browne: That is an intelligent intervention. The answer is that we shall see at the time— [Interruption.] Let me answer the question. We know for certain that for the purposes of the next general election the Conservative party is committed to taxing the same proportion of GDP as the Labour party. I hope—although it will depend on the economic circumstances and on what GDP is at the time—that the Liberal Democrats may be able to introduce a tax cut aimed at people on low earnings who, in my view, are currently paying too large a proportion of those earnings in tax. If we could do that and, as a consequence, reduce the proportion of GDP that is taken by the Government in overall taxation and help people on low incomes, it would be fantastic, but we need to make our overall calculations to see where we can afford to make the savings. We know that the Conservative party is committed to not doing that. For those who want an overall net reduction in taxation in the United Kingdom, there is only one party that can potentially offer that at a general election: the Liberal Democrats.
	On 15 April, the political editor of the  Daily Mail wrote a story beneath the headline "Cameron plans his own night of long knives in Shadow Cabinet clear-out". The right hon. Member for Witney—overlooking his own fallibility when it came to identifying the most damaging parts of the Government's agenda—had identified what were described as a "magnificent seven" members of the shadow Cabinet out of a 30-strong team. The article went on to say
	"He is, however, preparing a purge of under-performers".
	I regret to say that the hon. Member for Runnymede and Weybridge was not one of the "magnificent seven", and is therefore in the firing line. I for one am extremely disappointed, because I think that the hon. Gentleman made an excellent speech this afternoon which identified many of the Government's failings. I regret that his efforts are not appreciated more by the leader of his party.

Rob Marris: Talking of purges, the hon. Member for Falmouth and Camborne (Julia Goldsworthy) has been purged over these Treasury matters. Last year she committed the Liberal Democrats to producing a Finance Bill only once every two years. Is that still Liberal Democrat policy?

Jeremy Browne: rose—

Mr. Deputy Speaker: Order. This is a Second Reading debate and a fair amount of latitude is allowed, but I remind the hon. Gentleman that we are discussing the Second Reading of the Finance Bill.

Jeremy Browne: I am grateful for your guidance, Mr. Deputy Speaker.
	Everything that has been said by my hon. Friend the Member for Falmouth and Camborne (Julia Goldsworthy) is eminently sensible. I commend it, in its entirety, to the hon. Gentleman. Just as Labour Members would have benefited from hearing my right hon. and learned Friend warn them of their impending doom, every time my hon. Friend speaks she can offer them guidance that will prove extremely useful as they seek re-election against a very unfavourable political backdrop.
	Like the Budget, this Finance Bill fails all the tests of leadership. It has no great purpose, it has no great vision, and it flunks all the big challenges. Worst of all, the proposals that we will scrutinise in depth in the months ahead have no soul. It is now impossible to work out what the Labour party exists to achieve. The abolition, or doubling, of the 10p rate sends out the signal that the end of the empty hologram that was new Labour has finally arrived. It was Harold Wilson, who won four out of five elections while leading his party—four more than will be won by the current Prime Minister—who said that the Labour party
	"is a moral crusade or it is nothing".
	Many Labour Members seem finally, but far too late, to have realised that with the doubling of the 10p rate their party is now nothing.

Stuart Bell: It is a pleasure to follow the hon. Member for Taunton (Mr. Browne). He reminds me of a former Member of Parliament, Bob Woof, whom many Members may recall. Each year he made a Budget speech, but about the previous year's Budget. He read the previous year's Budget carefully, and then made his speech. Having listened to all of today's debate so far, I have a feeling that this too is a debate on last year's Budget, and on last year's abolition of the 10 per cent. tax rate.
	I remind the House that last year, as now, there was a Budget statement, followed by publication of the Red Book, which has been mentioned. It was followed by a Budget debate which continued for about five days, a debate on Second Reading of the Finance Bill—such as we are having now—a Committee stage, and Third Reading. Where the House went wrong in not picking up the fact that the 10 per cent. rate was to go must be a mystery to most of us. It seems to me that the reason why we are having a debate on that particular aspect is the Institute for Fiscal Studies and the figure of 5.3 million net losers, and I am not sure that the IFS report actually said that.
	I remind Labour MPs who are signing early-day motions and carrying their consciences on their sleeves that, in the 11 years of the Labour Government—to get on to the "vision thing" that the hon. Member for Taunton talked about—our vision has been clear. We believed in a fundamental and irreversible shift in the balance of wealth and power to workers and their families. Over those 11 years, we have brought in a national minimum wage, against great hostility in this House from the Opposition, who said that it would cost jobs, and increased it to more than £5 an hour. We introduced tax credits, of which we have heard some criticism, to which I shall refer in a moment. We have signed the social chapter; the Conservatives not only did not support it, but have said that they will repeal it when they come to power. We have brought in specific measures for the elderly, of which the increases in winter fuel allowances are one. Over 11 years, we have moved the balance of power towards workers and their families.
	If I may spend a moment on the 10 per cent. rate, the tax package last year was designed to target extra support to help many of those who only paid the 10p rate. For those aged 65 and above, age-related allowances were increased by £1,180 above inflation, meaning that 600,000 pensioners paid no income tax at all. For families with children, the child tax credit child element increased by £175 above earnings indexation from £1,845 to £2,085, providing additional financial support for families and further reducing child poverty.
	For those in work on low incomes, the first income threshold of working tax credit rose significantly from £5,220 to £6,420. Supporting work is the best route out of poverty through increasing the gain from work for many low income households. That is the background to the abolition of the 10 per cent. rate.
	We do not want to go back over history or to recite poetry:
	"see how dark the backward stream!
	A little moment passed so smiling!"
	It is a long time since we had a Conservative Government, but under the Conservatives the basic rate of tax was 23p in the pound with no tax credits other than the limited benefit from family credit. That meant that even the poorest taxpayers paid 23p in the pound. Under Labour, the basic rate is now 20p in the pound and there has been a major increase in tax credits, particularly for those with children but also for those without.
	The reforms overall meant that all income tax payers have benefited compared with 1997. Those on lower and middle incomes have benefited the most. Giving low-income families a negative income tax rate—that is to say a tax credit—is better than leaving in place the 10p rate; that was the philosophy and reasoning behind the Government's decision, which was not picked up throughout last year's Budget proceedings.
	The tax credits system—a minus rate of income tax—is the best way to help people out of poverty. Each year, the Labour Government have put more and more resources into tax credits. The 10p rate is not a targeted tax measure as all taxpayers benefit from it, including higher earners, such as those on £100,000 a year who would still only pay 10p in the pound on the first £2,230 of their taxable income.
	As my hon. Friend the Member for Dumfries and Galloway (Mr. Brown) and my right hon. Friend the Member for West Dunbartonshire (Mr. McFall) said, it is because of these tax credits that we have been able to deliver historic achievements such as taking millions of pensioners and children out of poverty. The tax credits mean that we have rates of 40 per cent. and 20 per cent. for income tax, but that we have effective tax rates of minus 1 per cent. right up to minus 200 per cent. through tax credits, so that the tax and benefits system pays more to people on low and middle incomes.
	While the House is focused on this matter, we must not overlook the basis of our economy. Part of the Bill calls for the promotion of access to finance and resources for small and medium-sized enterprise and for the enterprise management incentive schemes. In this respect, I refer to David Smith's economic outlook column in  The Sunday Times yesterday. The hon. Member for Taunton gave us a great review of the press over the last 10 days, but David Smith said that our
	"job market remains extraordinarily strong, with a rise of 152,000 in employment in the December-February period. In the past year, employment has climbed by 456,000 to a record 29.51m."
	Twenty nine million of our fellow citizens are in work. As my right hon. Friend the Member for West Dunbartonshire said, there were 21 million beneficiaries from last year's Budget—something that must be repeated. There are nearly 700,000 job vacancies and the unemployment claimant count is at its lowest since June 1975.
	We have had forecasts on growth; my right hon. Friend the Member for West Dunbartonshire referred to them, as did the hon. Member for Runnymede and Weybridge (Mr. Hammond). In conjunction with the hon. Member for Taunton, I thought that the hon. Member for Runnymede and Weybridge made an excellent speech from the Front Bench. It was a strong Opposition speech and he should be congratulated on it. We will not go into his facts or polemics, but the manner of the speech was worthy of the House of Commons and for that he deserves congratulations.
	The growth rate forecast by the Treasury is about 1.85 per cent. It may be that the forecast will go down to 1.5 per cent., but I remember being an Opposition Member and asking Lord Lamont, as he now is, at that Dispatch Box whether we were in a recession. The answer was yes, we were; we had had three months of negative growth. We are not in a recession and we are not likely to go into one. We are holding the line in a very difficult and turbulent financial world.
	We read a lot about consumer confidence. The newspapers make a great thing about the loss of consumer confidence, but whatever the newspapers tell us—to get back to the hon. Member for Taunton and his diligence in reading newspapers—total retail sales in our country, including new floor space, were up in March on a year earlier. The rise was 1.1 per cent., while Tesco reported a 12 per cent. increase in sales in the past financial year. By the way, over the same period cash was used for 60 per cent of all retail sales, up from 54 per cent. in 2006. If we are moving away from a credit card economy to a cash economy, that is all to the good.
	The Chancellor said that the theme of the Budget was stability. We live in an unstable world and I shall not repeat all the arguments on the sub-prime mortgage crisis. I commend my right hon. Friend the Member for West Dunbartonshire on his excellent Treasury Committee report on the subject. We have moved over the last 10 years to economic stability and growth. We are faced with unprecedented turmoil in the financial markets, but in those 10 years of stability, we have been able to deliver real change in our economy.
	The national minimum wage, to which I referred earlier, has increased by 23 per cent. in real terms to £5.73 in October 2008, which has helped 1 million low earners, many of them women working part-time. We have lifted 600,000 children out of poverty since 1997 and action since the Budget of 2007 will lift an additional 500,000 out of poverty. Child poverty, which doubled in the 20 years up to the mid-1990s, has been reversed under the Government. What we can see is a strong economy underlined by great stability.

Graham Stuart: The Government set the target of halving child poverty by 2010-11. The Treasury Committee has said that if they do not put in place the policies and funding to ensure that that is met, it will
	"represent a conscious decision to leave hundreds of thousands of children in poverty for longer than is necessary or desirable."
	Does the hon. Gentleman believe that the Government are on track to halve child poverty by that date, or have they abandoned that aim as they are no longer wholeheartedly committed to it?

Stuart Bell: It would be a great help if the Conservatives were to match our commitment on child poverty. The point has been frequently made today that the Opposition are not the Government, and I fully accept that. I accept that the Government must make decisions and bring forward policies, but when we do have policies that are in the national interest it would be helpful if they were supported, and the Conservative Opposition should support our child poverty aims. We have heard about stability repeatedly from the Chancellor today, and also in the Budget—stability for the country as a whole. The Opposition are right that we have difficulties with consumer prices; wheat and fuel prices have risen. The price of a loaf of bread has risen in this country at the same level as in France and Italy. That is currently a problem for all such countries.

Graham Stuart: I am grateful to the hon. Gentleman for giving way again. No other countries are putting taxes up at present, as they know that they need to support those with least in their societies now when they are being hit with those price rises. Only our country's Government are hitting millions of poor people. That is why so many Labour Members are so uneasy about the Budget and the Bill.

Stuart Bell: Clearly, rising food and fuel prices will trouble the economy, and the Government must look at those matters and deal with them as they can. Making changes to last year's Budget this year might not be the appropriate way forward. Instead, the appropriate way forward might be that suggested by my right hon. Friend the Member for West Dunbartonshire and the Minister, which is to see how we might accommodate the changes being forced upon us by exterior events.
	The hon. Member for Taunton asked about the vision thing. There have been answers from the Labour Benches on the national health service and climate change, but the vision is also present in the Budget and the Budget statements. It is a value vision based on opportunity, fairness, efficiency and equilibrium between all strands of society. We are frequently coming across that vision. A reference was made to this being a managerial Budget. It was not managerial, but it was intended to accommodate a difficult financial situation and to be a steady-as-she-goes Budget—the words of Stanley Baldwin many years ago.
	There are difficulties, therefore, but within them there are also opportunities, and this Budget reflects those opportunities, as do the Labour Government. Our business is to maintain stability in our society in what is an unstable world, and this Budget does that. The measures announced today by the Bank of England, supported by the Chancellor, will assist that stability, and as time goes by we will see that the British public will come to understand that and will support us.

Michael Howard: Despite the strictures of the hon. Member for Middlesbrough (Sir Stuart Bell), whom it is always a pleasure to follow, the speeches we have so far heard in the debate have concentrated, as, I suspect, will those we have yet to hear, on the effects of the abolition of the 10p rate—or as the hon. Member for Taunton (Mr. Browne) rightly described it, the doubling of the 10p rate—on the 5.3 million households who will lose out as a result, and who are among the poorest households in our land. I know that there has been a certain amount of controversy about that figure, but no Member has put forward an alternative. The only Member who came close to doing so was the Chairman of the Treasury Committee, the right hon. Member for West Dunbartonshire (John McFall)—and, indeed, if we add up the various components he itemised in his speech, we get to a number that is pretty close to 5.3 million.
	It is right that we should concentrate on that aspect of the matters before us this evening, because there is no doubt that this change will cause genuine hardship to people such as the young man I met in a supermarket in my constituency on Friday. With great pride, he told me that he had been unemployed for some time and that he had just got a job in the supermarket. I congratulated him, of course. He is precisely the kind of person whom we ought to be helping by making work a more attractive prospect. It is madness to take action that will make the world of work less attractive to him and others like him, as this change will do.
	However, I want to concentrate in my brief contribution to the debate on another aspect of the change: what does it tell us about the Prime Minister? I have studied the Prime Minister for many years. We entered the House at the same time, after the 1983 election. During the 25 years that have elapsed since, I have had ample time to get to know him, sometimes at close quarters, such as when he was Chancellor and I shadowed him, and at other times from a distance. I do not want to damage him by praising him too extravagantly, but I have long had considerable respect for the Prime Minister. It has always seemed to me that, quite unlike his predecessor, he brought to his political life a clearly formed philosophy and a deep-seated sense of values. He wanted to help the poor, and he cared about social justice—indeed, we all do, although we may differ radically on what is the best way of achieving that eminently desirable goal.
	It has always seemed to me that the Prime Minister has been clear in his own mind that the best way of helping the poor has been through old-fashioned, socialist redistribution. By and large, that is what he tried to do during most of his tenure as Chancellor. Of course, that has given rise to a great deal of internal tension, because he was never prepared, or allowed, to admit that that was what he was doing. The word "redistribution" was expunged from the new Labour lexicon, so it was all carried out by stealth—and it was only moderately successful, largely because the Prime Minister's chosen weapon of the tax credit system is so complicated and unwieldy that many do not claim what they are entitled to claim, and many who do claim suffer severe hardship when overpayments are recovered. I was, however, always prepared to give the Prime Minister credit for good intentions; I always thought that although his methods may have been flawed, his intention was clear.
	So how on earth did it come about that this Prime Minister could introduce a change that hurts so many who are among the least well-off in our society? What is the explanation? We know that in one sense the explanation is that through making this change he found the money to reduce the basic rate of income tax from 22p to 20p, but why did he choose to benefit the somewhat better-off at the expense of the less well-off?
	The hon. Member for Hyndburn (Mr. Pope) said in his short-lived early-day motion earlier in the month that that was not the intention of the Government—that, in effect, it was an accident. However, no one doubts that the Prime Minister is a very clever man with a reputation—although perhaps not always well deserved—for prudence and caution. It is inconceivable that he could introduce such a measure without making a careful assessment of its consequences. After all, as Chancellor—when he introduced the Budget we are discussing today—and now as Prime Minister, he has held in his hands the power to make a real difference to the condition of life of millions of our fellow countrymen. I do not believe for one moment that he is so irresponsible that he would introduce a change of this kind without carefully thinking through all that it would mean for those affected. No, I think that the Prime Minister knew very well what he was doing, and he was doing it deliberately and for a purpose.
	Of course, we can only speculate about the reason, but I am afraid that none of the likely candidates reflects well on the Prime Minister. My hon. Friend the Member for Runnymede and Weybridge (Mr. Hammond), the shadow Chief Secretary, said, in an excellent speech that has rightly earned tributes from all quarters of the House, that it was to curry favour with the then Chancellor's own party in advance of a possible leadership election. That is certainly one explanation, but I confess that I am somewhat sceptical about it. I think that if there had been a leadership election, quite a lot of attention would have been paid to the consequences of doubling the 10p rate, and I am not sure that it would necessarily have helped the then Chancellor.
	Another possibility is that, even at that early stage, the current Prime Minister had an autumn general election in his sights. What better platform to appeal to middle England, he might have thought, than a reduction in the basic rate of income tax? If that were achieved at the expense of those who were less well off, so what? That would, of course, have been an extremely cynical act. Had it been put to the test, I do not think that it would have worked. We all want to better ourselves, but very few of us, if any, want to do so at the expense of those who are less well off than ourselves. If an autumn election had taken place, I do not think that the Prime Minister would have reaped the electoral reward that he may have expected from the policy.
	I am afraid that I cannot put out of my mind the thought that there may have been another, even more unworthy, reason for the Prime Minister's action. We all remember the flourish with which he finished his Budget speech last year. Without leak or prediction, the reduction in the basic rate of tax was produced, like the proverbial rabbit out of a hat, in the last few sentences of his speech. It had not been leaked or predicted, and came like a bolt from the blue.
	As we all know, the reply to the Budget is given by the Leader of the Opposition. It is often said that it is the most difficult speech in the parliamentary calendar, and as someone who has had the dubious privilege of delivering it on two occasions, I am rather inclined to agree with that assessment. The Leader of the Opposition is not given any notice whatever of the Budget's proposals. The hon. Member for Taunton missed the point that immediately after the then Chancellor announced that shock, unexpected, unanticipated reduction in the basic rate of tax, my right hon. Friend the Leader of the Opposition had to get to his feet to reply.
	I am afraid that I cannot entirely escape the thought that at least one reason behind the Prime Minister's action was the hope and belief that it would wrong-foot and embarrass my right hon. Friend and cause him to stumble at precisely the time when all the media's attention was upon him, and that that would damage his reputation, possibly even permanently. In the event, that proved a total miscalculation, as has happened so often on other occasions. My right hon. Friend dealt with it with his usual aplomb and the Prime Minister's arrow conspicuously failed to hit its target.
	What a tragedy it is that a man who undoubtedly came into politics wanting to help the poor, who devised extraordinarily ingenious and complicated policies for doing so, and who staked his reputation and integrity on that cause, should end up betraying those ideals, betraying those whom he had promised to help and, ultimately, betraying himself. What was the slogan of which we heard so much early in his premiership? "Not flash, just Gordon". Well, we know an awful lot more about Gordon now, and I suspect that we will hear an awful lot less of that slogan.

Eric Illsley: It is a pleasure to follow the right hon. and learned Member for Folkestone and Hythe (Mr. Howard), although I am not sure that I agree with his analysis. I do not think that when my right hon. Friend the Prime Minister was Chancellor, he would have designed the replacement of an income tax rate simply to wrong-foot the Leader of the Opposition. That is a simplistic scenario. I suggest that he might have decided, wrongly, to try to distance himself from the then Prime Minister and establish his own manifesto before a possible autumn election.
	I shall return to the 10p tax rate, but I turn now to a matter that I have raised in the House on a number of occasions recently—the rates of alcohol duty that are in the Bill and were announced in the Budget. I declare an interest: I am the honorary adviser to the northern Federation of Licensed Victuallers Associations, which, like most people in the pub industry, is concerned about the increases in alcohol duties, particularly that on beer. Duties on other alcohol are not as punitive and are not having the same effect on the pub industry.
	It is no secret that the pub industry is in trouble. Both the Prime Minister and the Chancellor have been lobbied on the issue a great deal in the not-too-distant past, and there has recently been a flurry of reports on the industry's problems and the crisis that it faces. Various estimates have been made of the number of pubs that are closing each week in this country, ranging from 30 to 60. Figures have also made the broadsheet press, stating that the last time the volume of beer sold was equivalent to the present was in the 1930s. They also stated that the beer market has fallen by 22 per cent. since its peak in 1979, and beer sales have fallen by 49 per cent. since then. The breweries' profits have decreased by some 78 per cent. There has been a huge decline in beer sales in pubs, and the increases announced in the Budget have increased that problem.
	One problem that the beer industry faced last year was the smoking ban, which has had an effect on pubs and clubs. The industry has not complained about that and has accepted it, but the Government's increasing of beer duty has put another nail in the coffin of pubs and clubs around the country.
	The main problem that our pubs and clubs face is the sale of alcohol in supermarkets, which have targeted alcohol sales as something on which they wish to take over from the pubs. They are in competition with pubs, and at the moment they are winning by selling alcohol at less than the wholesale cost, as a loss leader at a lower price than they pay for it. Alcohol is sold to people who drink at home, in an uncontrolled environment, whereas there are controls on them when they drink in a public house. Pub operators and owners have to operate to codes of practice, whereas people drinking at home can drink as much as they like. If alcohol is extremely cheap, as it is in supermarkets, it is easy for them to do that.
	I am talking not about under-age drinking or sales to minors but about sales to an adult population, particularly those between the ages of 18 and 35, who drink alcohol bought from supermarkets. We have debated the matter before in the House. The phrase used is "pre-loading": young people drink at home among their friends before they go out to a pub or club. Unfortunately, the drunkenness kicks in at the last licensed premises that they visit. The pubs and clubs get the blame for binge drinking, yet a lot of this drinking is done at home.
	There has been a call for controls to be placed on such sales by supermarkets to try to make pubs more attractive, to promote them as controlled drinking areas and to prevent them from going out of business in the face of competition from supermarkets and their loss-leaders.

Brian Binley: I am delighted with the terms of the hon. Gentleman's argument and he is making a very valid point, especially with regard to rural pubs, which have been particularly hard hit by the smoking ban and the increases that we are discussing. They are the heart of our rural communities. Does he agree with me that we are in danger of losing more and more of them, and that that would be bad for our rural communities?

Eric Illsley: I am grateful to the hon. Gentleman for that and yes, I do agree with him. Attempts have been made to deal with the situation. One initiative aimed at rural pubs used the catchphrase "The pub is the hub". Some rural pubs were given post office counters and internet connections in an effort to attract people there to do business, and to retain the pub as part of the community by allowing it to go further than just selling alcohol. This is a big issue, particularly in rural areas, but even in urban areas pubs are closing at a drastic rate.
	I have referred before to sales promotions in supermarkets, so I shall not dwell on this point. We debated this issue in the House on 6 December, and I gave examples of supermarkets offering cases of beer at the discounted rate of three for the price of two, and three bottles of spirits for the price of two. In one instance, a 75 cl bottle of whisky was sold at £9.99, yet the 1 litre bottle was sold for £10—for an extra penny. It might interest Treasury Front Benchers to know that on the day of this year's Budget, supermarkets knocked £5 off the price of a bottle of spirits. So whatever the message that the Government were sending out regarding controlling or curbing drinking, the supermarkets cocked a snook at them on that one.
	Further such examples have been given in debates in the House. Budweiser sold beer to Morrisons supermarkets at £9.82 per case excluding VAT, and Morrisons sold those cases for £10—the same as, or less than, the wholesale cost. The supermarkets are taking the mickey out of the Government and ignoring any message that comes across on safe drinking by selling at a loss.
	In 1968, a can of Tetley bitter sold at the off-sales at a pub in, say, Yorkshire, where the Tetley brewery is located, for the equivalent of 79p. Today, a can of Tetley bitter costs about 55p. In February 1986, when, VAT was 15 per cent., a pint of Tetley bitter in a pub cost 68p. If we add 2.5 per cent. VAT to bring it up to the present rate and we allow for inflation, that price rises to £1.51. Today, a pint of Tetley bitter is being sold in pubs in Leeds, for example, for between £2.40 and £2.50. Such is the cost to pubs of overheads and so on that they simply cannot compete with the supermarkets. Whereas a pint of Tetley bitter is £2.50 in a pub, it is 55p down the road in the Asda supermarket, for example. We are talking about a figure that is 59 per cent. higher than the retail prices index. This is the competition from supermarkets that pubs are having to deal with.
	How do the supermarkets get away with that, and how do they fund it? The answer is simple—part of that funding comes from us, the taxpayers. Through the VAT regime, the supermarkets can claim back some of the VAT resulting from such sales. For example, if a pub buys £200 worth of beer, it will try to sell it at a profit to cover its overheads. It pays £35 VAT on the £200 of beer and claims £17.50 back. A supermarket buying £100 worth of alcohol will sell it at £75. The VAT on that figure takes it to £88.12, so it is paying £13.12 in VAT but it claims £17.50 back, just as the pub does. However, the net contribution to the Treasury is £4.38, so the taxpayer is subsidising the supermarkets to sell alcohol at a loss. We are not claiming the full amount of VAT back. After taking into account VAT, the net loss to the supermarket on £100 of alcohol, which it sells at £75, is £20.60. It simply recovers that by increasing the price of goods in the non-VATable area, which, of course, is food. That is another reason why food prices are increasing.
	That is a rather clumsy example of how VAT works, but if we apply those figures to alcohol sales of some £50 billion in our supermarkets, which are avoiding VAT and requiring us to pay for it, we can see exactly what the Government are losing. If they addressed that fact and claimed some more VAT back off the supermarkets, we would probably not be having the debate on the 10p rate of income tax, as plenty of revenue would be coming in. Something has to be done about how supermarkets can avoid their responsibilities in respect of VAT and sell alcohol as cheaply they do.
	Another suggestion that has been mooted heavily is to rate supermarkets on the areas in which they sell alcohol on the same basis as pubs—in other words, on turnover, not square footage. The rate that would be paid by a supermarket on the section of it that carries alcohol would be higher than the rate for the rest of it, but on a basis equivalent to a pub.
	I turn now to an issue that is not covered in the Finance Bill, but which I and other Members think perhaps should have been: VAT on bingo participation fees. Some of my colleagues and I have been lobbying the Government for a number of months on the issue of bingo duty. Just as pubs are closing, so are bingo clubs. Nine have closed already this year, and some 57 closed last year. The bingo industry has made representations to the Government for a number of years regarding what it refers to as
	"the current system of double taxation"
	on bingo played in licensed clubs. Licensed bingo remains the only gambling product subject to double taxation, which results in an effective tax rate of 28.2 per cent., compared with 15 per cent. for most other gambling products. The industry believes that this is illogical.
	I can explain the situation very simply. If a Member of this House goes into a betting shop to put a bet on a horse, they are not charged an entry fee or required to pay anything to place that bet; they simply pay the stake over to the bookmaker, who takes it at a certain set of odds. If a person walks into licensed bingo premises to play bingo, they might be charged for entry or for the bingo card on which they will play the game, and anything that they buy within those premises will also be subject to a charge and to VAT. So bingo operators are subject to VAT and what is known as gross profit tax.
	In 2003, the Government chose not to remove double taxation from bingo. There are some 3 million bingo players at any one time; they continue to be disadvantaged by this system, and bingo clubs continue to close. Bingo is a soft form of gambling that appeals mainly to women, and all constituencies contain bingo clubs. Bingo should not be subject to this level of taxation. We should be encouraging safer forms of gambling, rather than promoting casinos and all the rest of it. I mentioned that there are 3 million bingo players at any one time, but I should also say that the total membership of UK bingo clubs is about 17.5 million people—that is an average of 30,000 members per club. If an hon. Member's constituency contains a Gala bingo club, the chances are that 30,000 people will be registered as members of it. My local club in Barnsley, Central has 26,000 registered members.
	The removal of VAT on bingo clubs would be cost-neutral to the Treasury because it would help to keep clubs open. The £75 million that the Government get from VAT on bingo clubs is countered by the loss of tax from other areas of revenue. The Bingo Association and the bingo industry are therefore saying to the Government, "You're allowing these clubs to close at an alarming rate, and you're losing the VAT and other revenues from them. If you waived VAT and stopped the double taxation, you would keep that VAT and you would also get other revenue from people paying tax on other aspects of the clubs."

Stewart Hosie: I know that one of the arguments has been that the removal of VAT might require a derogation from the EU, but can the hon. Gentleman confirm that no such derogation is required in terms of gambling or gaming—that matter is purely at the discretion of each state—and that there would be no technical, legal or European obstacle to removing VAT on bingo?

Eric Illsley: The hon. Gentleman is right to say that that very technical issue would not require a derogation, because in order to levy VAT on bingo as we do, the Government apply a derogation to the existing European Union legislation. This issue is subject to a court case, known as the Linneweber judgment. I shall not go into that this evening, because it is extremely complicated and I would not want to bore hon. Members rigid by referring to it. In order to remove VAT on bingo duty, we would need an exemption from the exemption that we already have. The issue is complex, but it would not be difficult to remove VAT on bingo. As I have mentioned, the wider aspect is that the Government will lose revenue from the closure of bingo clubs, and our constituents will be deprived of a particular leisure activity.
	I mentioned that nine clubs have already closed this year at a potential cost to the Treasury of £5.6 million, which adds to the £25.9 million potential cost of the 37 clubs that closed last year—that already represents more than the tens of millions estimated by the Treasury. I hope that the Government will re-examine bingo duty as the Finance Bill goes through Committee. As I say, we have lobbied hard on this matter, from the Prime Minister downwards, to try to get some relief.
	My remaining comments will be about the 10p tax rate, which has been widely covered by hon. Members. I do not have much to add, except to say that I cannot understand why this Government, who have known about this for a year and have done the calculations, have abolished this 10p tax rate without realising the consequences. Like many hon. Members, I have been out campaigning in the local government elections and have been surprised by the representations that I have received on the doorstep, and by the number of letters and emails I have received about this matter. That is mainly because, like other hon. Members who made representations to the Treasury on behalf of constituents, I was assured that this would affect a small number of people at a very small level of income. As it is, that level of income is obviously very important to the people affected, because they are on low incomes, and I cannot understand why a Labour Government have simply not thought this through.
	I heard the Prime Minister saying on the radio today that nobody will lose out because of the proposal. My hon. Friend the Member for Middlesbrough (Sir Stuart Bell) also suggested that nobody would lose out, and that the 5.3 million people could be wrong. People do not agree with that view. They do not see the wider picture, and that perhaps their allowance has gone up in some way and perhaps the winter fuel payment will compensate them in another way. They see an increase on their tax assessments and a reduction in the money coming into their households each week. They perceive that they are being taxed by this Government even though they are the lowest-paid in our society.
	The Government must overcome that perception. Saying that we will have a review starting for the pre-Budget report in November simply will not wash with anybody. It will not wash with me, because I do not agree with that approach. I want the Government to re-examine this matter and come up with something substantial rather more quickly than that to alleviate my constituents' concerns. The only sensible option produced so far in this debate was put forward by my right hon. Friend the Member for West Dunbartonshire (John McFall), the Chair of the Treasury Committee, who said that his Committee would re-examine the issue. The Government must re-examine it; otherwise they will be labelled as the Government who are taxing the lowest-paid in our society while at the same time making concessions on inheritance tax and capital gains tax for venture capitalists. I urge my hon. Friends to look again at this issue.

Several hon. Members: rose —

Mr. Deputy Speaker: Order. Before I call the next speaker, may I say to the House that although we have a reasonable amount of time left, hon. Members will be aware that a number of other hon. Members are seeking to catch my eye, so unless contributions are reasonably short, a number will be disappointed?

Graham Brady: I shall try not to speak for an unlimited period of time, Mr. Deputy Speaker, in deference to the House and in the interests of other hon. Members. It is a great pleasure to follow the hon. Member for Barnsley, Central (Mr. Illsley), whose three key points contained an important common theme: they all related to the direct ways in which taxation impacts on people's daily lives. I strongly endorse his comments about bingo, where a clear unfairness will increasingly take away one of the few areas of social interaction for people in many communities. That matter should be addressed.
	My hon. Friend the Member for Runnymede and Weybridge (Mr. Hammond) began by saying that the Finance Bill should be supporting business and consumers but is failing to do so. The hon. Member for Taunton (Mr. Browne) made an entertaining speech, in which he said that the Budget was puny and unimaginative. My take on things is that the fundamental problem is the Budget's lack of theme and the fact that there is no theme or context to the Finance Bill either.

Stephen Hesford: Unless I have completely missed something, was not the theme the credit crunch and the need for stability? The Budget was all about a steady-as-she-goes approach within that context. That surely was the theme, and it was successful.

Graham Brady: I am grateful to the former chairman of the Altrincham constituency Labour party for making that point; he may return to that role in the near future. He makes my point for me, because the Budget, and the Finance Bill that seeks to implement it, demonstrated a continuation of business as usual; the same procedure and approach that we have had over a number of years rolled on. Precisely what it failed to do was to respond in any significant way to changed circumstances.
	The underlying assumption of the past 10 or 11 years is that a high tax burden is sustainable and that the Government can keep taking money out of people's pockets and it will not hurt and people will not object. The assumption is that that is true for individuals and for companies. We are now starting to find—the story is the same from Labour Members—that such taxes are becoming much more difficult to justify in the difficult circumstances pertaining today when people are up against the credit crunch and worried about whether they can pay their mortgages or whether they will be in stable employment in one or two years' time.
	The only obvious concession to a new and more difficult economic situation was the six-month delay in the implementation of the fuel duty increase. That is a welcome recognition of the fact that fuel costs are rising for families and businesses, which is creating a competitive problem for UK hauliers, many of whom are competing against continental competition from countries that do not impose such a high fuel duty. However, the Budget was not clear about why the duty rise would have been unacceptable now. If it is because of the overall effect on costs for families or businesses, how will the Government respond if the same, or worse, circumstances appertain in October when they intend to proceed with the duty increase? People need some clarity about whether the Treasury accepts the principle that the costs in UK industry should not be levered up, creating an increasing competitive disadvantage for British businesses. Or was the delay just a response to short-term pressure and intended to get the Chancellor off the hook? Do the Government accept the principle that families are hurting because they have to pay increased fuel costs every week when they fill up their cars' fuel tanks, or was the delay just a short-term fix to put off the moment of reckoning?
	The same question arises in relation to the abolition of the 10p tax rate. It is welcome that Labour Members are starting to recognise that taxes cannot be increased again and again without consequences. For 11 years, taxes on all our constituents have increased dramatically. The pain has been mitigated, in many cases, by significant increases in salaries, easy credit, and rising house prices, which have given people a sense of security. It has also been mitigated by the hugely complex system of tax credits, which has reduced the impact on some groups of people.
	In proposing the abolition of the 10p rate of income tax, the Chancellor—or perhaps it is the Prime Minister—has belatedly discovered the joy of simplifying the tax system. That is welcome, but simplifying taxes when raising or maintaining the overall burden of taxation means that there will inevitably be losers as well as winners, which has also been demonstrated in the changes to capital gains tax. The drive towards simplification is welcome, but it has been necessary to introduce mitigating measures, such as entrepreneurs' relief and the transitional arrangements, because of the damaging effects—some of which were unintended consequences—on some people.
	With both the capital gains tax regime and the abolition of the 10p rate, I hope that a new understanding is developing on both sides of the House that there is a limit on how much it is fair or sensible to tax people, and that that limit has been reached if not exceeded.
	Much has also been said about how proper consultation could have helped on the capital gains tax issue. That brings me to my final issue, because I wish to congratulate the Treasury on its sensible and detailed consultation on the proposed tax change to aviation duty. The changes will come into effect in autumn next year, but the paving measures are in this Finance Bill. The intention is to move from air passenger duty to aviation duty. The consultation document released in January was a serious and thorough exploration of the options and some of the difficulties arising from the proposal. I suspect that by now, with the consultation drawing to a close on Thursday of this week, Ministers will have begun to arrive at some conclusions. It will be clear, for example, that applying aviation duty to freight could lead to significant problems for the UK air freight industry. It could lead to significant job losses, especially in some parts of the country, such as the area around East Midlands airport. It could lead to the diversion of air freight from UK airports to near continental airports, and that will not save any emissions. Instead, it will increase road haulage and the environmental impact caused by the transhipment of freight by road. It will also transfer thousands of British jobs to other EU competitor countries, and that will clearly not be beneficial to the British economy.
	The document also goes into sufficient detail about some of the other difficulties that might arise. The first obvious answer is to exempt freight-only flights, but not all flights carrying freight are freight-only flights. Passengers and freight are often carried on the same aircraft.
	The second conclusion that is difficult to escape is that applying a distance criterion to aviation duty discriminates in favour of short-haul routes and against longer haul routes. Short-haul routes tend to give rise to the most emissions, which are concentrated during take-off and landing. Therefore, mile for mile, applying a distance criterion has a perverse effect.
	Thirdly, the inability to apply the charge to movements other than those that originate at UK airports would encourage the use of aviation hubs outside the UK. All the same aviation would take place, so there would be no environmental benefit. People would take short-haul flights from UK airports to Schiphol or Paris to transfer to their long-haul flights. All that that would achieve is to damage Britain's strategic economic interests by undermining UK hubs.
	Fourthly, the duty could have a damaging effect on regional airports. It could therefore increase the pressures on and congestion at Heathrow and other airports in the south-east of England.
	Fifthly, an up-front charge, unrelated to demand and the number of people on board a flight, would make it much harder to establish new long-haul routes from regional airports. I have a particular interest in Manchester airport, which is very close to my constituency. When long-haul services from regional airports are established, they often depend on relatively low volumes of use in the early stages, and putting a charge on the flight when the service is first inaugurated could render them uneconomic and uncompetitive, and might also lead to a diversion of traffic to the more congested airports in the south-east.
	Sixthly, basing the duty on the maximum take-off weight of the aircraft provides no incentive to invest in cleaner aircraft. Furthermore, while the shift to a duty based on air movements rather than passenger numbers is superficially attractive, the change could lead to higher emissions rather than lower emissions for all the above reasons. Given that the whole of aviation will, we hope, be included in the European emissions trading scheme within a relatively short period of time—that ought to cover the environmental costs of the industry—we are not talking about a provision that will have an environmental benefit. In fact, the new tax might defeat many of the objects that it purports to achieve.
	Finally, the proposals might actually breach international law. They might be contrary to the Chicago convention and the EU-US aviation agreement. For all those reasons, I hope that the Government will learn something from the numerous problems in their application of tax policy and tax changes in recent months. I hope that they will reflect on the fact that where they have not consulted, they have come unstuck. They have had to engage in some embarrassing changes in policy. They have had to execute some U-turns and have looked unprofessional and unco-ordinated in doing so. When they have engaged in some consultation but have not taken proper account of its findings, they have had further difficulties.
	In this case, the Government are consulting. They have given themselves a reasonable time. They do not need to finalise the details of the duty regime until this autumn in order to give the 12 months' notice that they have promised the industry for implementation in November 2009. They have time to think again and to consider the implications of what they are doing. I strongly urge them to do so.

Russell Brown: It is a pleasure to follow the hon. Member for Altrincham and Sale, West (Mr. Brady).
	The top priority of the Budget was to ensure the country's economic stability not only for today but for tomorrow and into the future. The Budget sets out a number of measures to support the economy and families while preparing the nation to meet all the challenges of the future. Those challenges and the steps taken to deal with them include tackling child poverty by increasing housing benefit disregard, child benefit and child tax credit; promoting enterprise by improving access to finance; improving access to housing though more shared equity for key workers and first-time buyers; and tackling climate change by increasing incentives to go green.
	After the Budget debates, the official Opposition voted specifically against measures on alcohol duty and vehicle excise duty. By voting against those measures, they voted against the funding that enables the increases in child tax credit and child benefit, as well as the extra winter fuel payment for this year.

Elliot Morley: Is it not also the case that it undermines the Conservatives' green claims to vote against VED changes that are based on emissions and the fuel use of cars? This is surely the kind of route that we want to follow in being more thoughtful about how we apply green fiscal measures. Although I welcome what is being done in the Budget, there is an awful lot more that we could do.

Russell Brown: I agree wholeheartedly with my right hon. Friend. I thought that we were at a stage in this House where we were all 100 per cent. behind making progress on green issues. Clearly, as he has pointed out, there was a fundamental flaw on this occasion.
	The Conservatives voted against the Budget measures that raised money, but not against those that increased spending. That equates to a £10 billion black hole in their economic plans on top of the £10 billion in unfunded tax pledges. Support in the Budget included the additional one-off payment in 2008-09 of £100 alongside the winter fuel payment for the households of those aged over 80, and of £50 for the households of those aged over 60. That will benefit about 9 million households. The increase in the first child rate of child benefit to £20 a week from April 2009 reinforces our Government's commitment to child benefit as a foundation of financial support for all families. The increase in the child element of the child tax credit of £50 a year above indexation from April next year will further help low to middle-income families.
	The public will see through the reckless unfunded promises made by the official Opposition, whose opportunism showed through when the Leader of the Opposition called for the 10p rate to be restored. Now there seems to be confusion, because they refuse to say what their policy is. That is typical of the reckless and irresponsible approach that they take to issues of taxation and spending. It was precisely that reckless approach to public finances that saw the last Tory Administration inflict on hard-working families across Britain interest rates at levels that reached 15 per cent. We would never wish to return to those days.
	More than a third of the Bill is concerned with measures designed to simplify and modernise the tax system. That will help businesses to be more productive and the UK to remain internationally competitive in these difficult times. The 2008 Finance Bill will implement the business tax reforms announced in the 2007 Budget. The Bill will further promote access to financial resources for small and medium-sized enterprises through reforms in the enterprise investment scheme and the enterprise management incentive scheme.
	The Bill implements the capital gains tax reform announced in the pre-Budget report towards the end of last year. That includes the introduction of the flat-rate capital gains tax of 18 per cent. and a 10 per cent. entrepreneurs' relief on the first £1 million of lifetime gains. The Bill will also reform the North sea fiscal regime, particularly focusing on the tax treatment of assets. Petroleum revenue tax will also be reformed.
	Having mentioned petroleum, I want again to put on record my thanks that the Chancellor saw fit to delay the fuel duty increase that had been proposed for earlier this month. I know that there is likely to be a proposal from some in this House to introduce a fuel price regulator. I hope that my right hon. Friend the Chancellor will be in a position fully to explain why such a proposal is unmanageable.
	As I am talking about fuel, I also want to mention an issue that blights many who live in rural communities—household heating oil. Those people are among the hardest hit. I know from a recent discussion with my hon. Friend the Minister for Energy that we need seriously to consider a number of issues, including social tariffs, which would alleviate some of the problems that many households face.
	Looking to the future, as a nation we need to set our minds to the ever-increasing price of crude oil. It has taken us a long time to reach the price of $100 a barrel. It is not uncommon to see some of the major oil companies saying in the press and the media that oil will cost $200 a barrel in the next two or four years. If that is the case, we all need to consider the issue seriously now rather than waiting until it happens.

Graham Brady: On that point, does the hon. Gentleman agree that if oil continues to increase in value in the way that he suggests, it would be folly to proceed with future increases in fuel duty?

Russell Brown: I thank the hon. Gentleman for his intervention. The current and the previous Chancellor have obviously watched the increase very carefully in recent years. If the price of crude oil was seriously to increase, and crept up towards $200 a barrel, we would need to look at the issue in its entirety. It is for all of us seriously to consider where we are going as a nation, and whether we will be held to ransom by oil producers. The Organisation of Petroleum Exporting Countries is not at present considering increasing output; if it did, the price of oil would fall, so we are, to a certain extent, being held to ransom.
	On the reduction in the basic rate of income tax from 22p to 20p announced in last year's Budget, and the abolition of the 10p rate, we should not forget that more than 600,000 pensioners will be lifted altogether out of paying income tax. That is a major issue for some pensioner households. Earlier, I intervened on the hon. Member for Taunton (Mr. Browne); he has not stayed around to hear the end of the story that I told him, but I am sure that he will read  Hansard enthusiastically tomorrow. I told him that within two or three weeks of the Budget last year, a number of colleagues and I met the then Chancellor of the Exchequer, now the Prime Minister, to discuss various aspects of the Budget. Obviously, there was a lot that was good in it, but I took the opportunity to raise certain issues.
	I represent an area that is renowned, north of the border at least, for having a low-wage economy and very low household incomes. I thought that the abolition of the 10p tax rate would bring severe hardship to a number of households. In recent weeks, we have read in newspapers, seen on TV and heard on the radio that many households and individuals will be adversely affected, including women pensioners under 65, those who have retired early on the grounds of ill health, and wage-earning households where there is an income of under £18,000 and no recourse to tax credits to offset some of the loss.
	The tax credit system has to be improved; that may be the best way of putting it. In an intervention on my right hon. Friend the Member for West Dunbartonshire (John McFall), I made the point that far too many families have fallen foul of the system and ended up having to repay some of the tax credit that was awarded to them. Let us imagine someone on a low income, earning barely more than the national minimum wage, working hard and taking the opportunity to do a little bit of extra overtime. Months down the line, that may put their figures out of kilter, and it may mean that they receive an overpayment. In some cases, such people have unfortunately fallen foul of the tax credit system. They are then very reluctant to go back to it. That is a tragedy, because tax credits have removed so many families and children from poverty. I raised that issue with the former Chancellor shortly after the Budget statement last year, and I have also raised it twice in the past three months or so with the current Chancellor. He understood, and made it abundantly clear that he had been lobbied on the issue, particularly as regards the issue of women pensioners under the age of 65.
	I am somewhat perturbed by some of the stories that the press have run. As well as dealing with constituents through correspondence, I have also taken the time to pick up the phone and call them in the evening, so that I can understand what their difficulties are. I have been astounded by the number of pensioners over 65 who have believed everything that has been in the press. They have not recognised the fact that there has been an increase in their personal allowance, which will more than likely take many of them out of the tax-paying bracket. That has not been helpful. I tell my right hon. Friend the Financial Secretary to the Treasury that I suspect that in many working households, people in the low-earning bracket, who have not yet received their April salary, do not yet realise the impact that the measures may have on them.
	How did we get where we are? The figure of 5.3 million has been quoted regularly today, but I am not desperately concerned about the exact figure, because I come from a background where if people on low incomes are being adversely affected, we have to do something about it. Whether we are talking about 5.3 million people or a few hundred, it matters. There are people who will find it much more difficult to make their household budget meet their needs. I tell my right hon. Friend that we have a problem, and we, as a Labour Government, need to put it right. It really does not matter how we try to dress things up, or what the facts are. If a pensioner pays an extra £1 a week, or £52 a year, we may try to offset that with a winter heating allowance increase, but the reality is that that does not matter to them. All that they are concerned about is the fact that they are paying additional income tax.
	I am greatly concerned by the fact that our problem—I do see it as a problem—is not easily resolved; there is no quick fix. Earlier, the hon. Member for Buckingham (John Bercow) suggested that an increase in the national minimum wage would help low-wage earners. Yes, it would, but that is no good for women pensioners under 65 years of age, or anyone who has retired early on the grounds of ill health. The matter is much more complex than that. Supporting an amendment next week is not the answer, either. The question of how the situation arose is of deep concern to me. I see that the right hon. and learned Member for Folkestone and Hythe (Mr. Howard) has left his place; I do not agree with any of the conspiracy theories that he put forward.

Mark Hoban: Given that the Treasury knew at the time of the previous Budget that 5.3 million households would be net losers from the change, why does the hon. Gentleman think the Treasury went through with it?

Russell Brown: I was about to come to a point that may provide the hon. Gentleman with some answer. I am not absolutely convinced on the subject, but I am prepared to give those involved the benefit of the doubt. I would like to know whether someone got their calculations wrong. Or was bad advice given, and taken?

Graham Stuart: Just to be clear, is the hon. Gentleman saying that the only excuse that he can think of is the incompetence of the former Chancellor of the Exchequer?

Russell Brown: I am not saying that at all, and the hon. Gentleman should know better than to try to put words into my mouth from across the Chamber. There has been an error that affects many people in this country. As I say, it is the duty of this Labour Government to put that right.

Mark Hoban: The hon. Gentleman was not able to explain why the former Chancellor made the change, and he ruled out incompetence. Let me ask the hon. Gentleman another question: given that the problem was known a year ago, why has it taken the Chief Secretary to the Treasury so long—a year—to suggest that a review be undertaken? Is the timing down to the imminence of next Monday's vote?

Russell Brown: I am not convinced that the hon. Gentleman is right. We have to look. Undoubtedly, there were a number of Members—probably on both sides of the House—who knew that there was an issue. Has the hon. Gentleman's party, knowing that there was a problem, merely sat quietly and brought the issue to the fore only in the run-up to the local and mayoral elections? We can all have conspiracy theories. Many on the Labour side had deep concerns, which they raised hoping that the matter would be corrected. It has not been. That is why I am saying that any amendment next week will not put the issue right.

Mark Hoban: He is giving up.

Russell Brown: No, I am not giving up. The comments made have been to the effect that the issue can be reviewed and looked at. I urge the Chancellor and his team to consider seriously the offer made this afternoon by my right hon. Friend the Member for West Dunbartonshire: an answer may be found by working with the Treasury Committee. That answer must be found sooner rather than later.

Brian Binley: It is a pleasure to follow the hon. Member for Dumfries and Galloway (Mr. Brown), who always speaks with care on behalf of his constituents. I am sure that many of them would listen to his concern about fuel prices, which is shared by many Members.
	I was disappointed earlier at the words of the Chief Secretary to the Treasury. Given that she represents a Yorkshire constituency, I would have thought that she would have known a little more about how to judge a wicket. It seems to me that she was on a particularly sticky wicket today, and I expected her to respond accordingly. However, my judgment of her words was that she thought that the wicket would take a bit of spin, and I found that disappointing.
	I want to talk about what is missing from the Finance Bill and what should be put in on Report. I want to concentrate on three issues: the rising costs of regulation faced by business generally; the increasing tax burden borne by small and medium-sized enterprises, particularly small ones; and the personal debt faced by many of the poorest in our community, for whom the cutting of the 10p tax rate will cause considerable hardship.
	I have spoken about regulation on a number of occasions and the issue is well rehearsed among many other Members. It is almost a truism now to say that the cost of regulation is hitting business hard. Much of that regulation is increased tax regulation, with which the Bill is particularly concerned. The Chancellor's inability—or unwillingness; call it what you will—to simplify that tax burden for business generally is a sizeable omission. I do not need to repeat that the British Chambers of Commerce recognises that the cost of regulation under this Government has now risen to £66 billion—a massive burden for business, given the global challenge that is emanating from Brazil, India and China. In addition, the statutory instrument statistics for 2007 made it clear that 14 new regulations were enacted by the Government every working day. Many of them impact on business. Finally, the Federation of Small Businesses said that, on average, small businesses spend seven hours a week on red tape and paperwork.
	Those are tremendous burdens on a business economy to which we are looking to provide the real challenge on which our children and grandchildren will rely for their well-being in 20, 30 and 40 years' time. This House does not often think in terms of such lengths of time, but it behoves us to do so. Otherwise, we shall find our decline down the table of well-being continuing and accelerating. I find that a fearful prospect.
	I do not need to talk too much about the need for tax changes because the Treasury Committee report on the 2008 Budget made that plea on a number of occasions. I could read them out, but I do not think that you, Mr. Deputy Speaker, would want me to do so, given that time is limited. However, the Treasury Committee grabbed on to the fact that we need to simplify our tax system and get burdens off the backs of businesses, particularly small ones.
	The National Audit Office looked at small businesses in 2006. I have not seen any changes as a result of that audit, although the Government should have taken notice and created change. That is a fine example of how the Government, in my humble opinion, are going wrong. The National Audit Office said that the monitoring regulations for small schemes were not well developed and that there was no assessment of the impact of Small Business Service expertise on the development of regulation. Indeed, the Government went on to argue that they would cut the number of small business support schemes from the estimated 3,000 in existence at that time to 100.
	Way back in March last year, I asked the Treasury how many schemes had been cut, how many had been consolidated and how many were in existence then as a result of the reduction. Secondly, I asked what assessment had been made of the effectiveness of the schemes, but I am afraid that I got no answer. I tabled a written question on the issue on 3 April this year, which means that I was due an answer this morning. Sadly, I did not receive an answer to the important question of how many schemes have been reduced, how many are now in existence and the Government's assessment of their effectiveness. My guess is that I will not receive an answer, although I hope that the Minister will give me it tonight. Unless the Government effectively assess what they do, they cannot do anything effectively; the premise is simple. My concern about the Bill is that nothing in it tells me that the Government are assessing properly. I shall talk more about that in a little while.
	I move on to taxation. I can say from my own experience that the business sector is not getting the message that the Government are business friendly. In fact, it is becoming increasingly concerned about the Government's attitude when it comes to real measures rather than words. There has been a capital gains tax increase from 10 per cent. to 18 per cent.—an 80 per cent. increase. I welcome entrepreneurial relief, but many entrepreneurs are still being put off from starting, developing and growing businesses. We need to recognise the impact of such increased taxation on small businesses particularly. What assessment has been made of that increase, and what effect do the Minister and the Government generally feel that the increase will have on small business start-ups and on the businesses that might leave these shores as a result of increased taxation? Capital gains tax plays a particular role in that respect. It is estimated that the Exchequer yield from increased capital gains tax will be £250 million in 2008-09, £300 million in 2009-10 and £500 million in 2010-11. However, it does not seem to assess what the cost impact will be in real terms. If it does, I will be happy for the Minister to prove me wrong later, but I bet that I do not get a proper answer.
	An example of the impact of Government thinking on small businesses is that of income shifting. Many small businesses run by husband and wife teams will recognise the value of consultation undertaken by the Government after due pressure and will be equally pleased that this measure has been put off until 2009, but there is fear about the bureaucracy that will be enacted at that time. Anybody who has been involved in a small business and knows about the impact of such bureaucracy will understand that fear. It will mean all sorts of double accounting for husband and wife teams.
	My main concern, however, is that the Government seem to believe that every small business is out to twist the taxman. That is the impression that they give. One need only read what the Chancellor said in his Budget speech to recognise that that was the underlying theme of this move. The truth of the matter is that most people in small businesses are, frankly, too damn busy—I apologise if that is unparliamentary language, Madam Deputy Speaker—earning a living and creating and developing their businesses to have the time to think about dishonesty with the taxman. In fact, they are quite fearful of the taxman and want to be honest because they do not want him on their backs. I do not understand why the Government think that small businesses are out to cheat them. Again on assessment, it would be nice to know what is the economic advantage to the Treasury. Has that figure been worked out? Are we putting a massive burden on small business generally for very little return to the Treasury simply because this Government do not trust business? If so, business knows the answer and will know how to act.
	Let me conclude by talking about the impact of personal debt, particularly among the very poorest in our society. I quote from a document that states:
	"The Bank of England has estimated that around half the people who describe debt as being a "serious burden" are from a low income group...People living in housing provided by local authorities or housing associations are more than twice as likely to have been in debt than the average person...Debt and a number of other serious social problems are interdependent on each other both in terms of cause and effect...Those out of work are more likely to have experienced serious personal debt problems...Those who left school early, or came from single parent families, or whose parents were unemployed are more likely to have been in debt."
	There is a massive debt problem for people at that level; I do not want to talk about loan-sharking today, but that has an impact. It is all about weekly cash flow, and the problem is that the Government's proposals will affect that. There lies the hidden problem that they have not understood. I wonder whether they have assessed the impact of that weekly necessity to repay debt and how that relates to the abolition of the 10p tax rate. If so, perhaps the Minister will tell me what it is. That is a serious matter that has not been considered and needs to be.
	The Budget, as represented in this Finance Bill, has not helped many sectors of the community. It has created massive concern for home owners, as indeed has the Prime Minister—the previous Chancellor over a period of years. It has brought despair to would-be first-time buyers, because there was no help for them. It has turned off entrepreneurs and depressed business managers. It has made the poor poorer. Sadly, all this is from a Minister who has bailed out bankers who have caused their own problems, and caused problems for this country, not only by allowing increased personal debt but by acting in the most irresponsible manner imaginable. There are parameters to controlling any sector of business, and, by golly, there is an immediate need to look at the finance sector.

Stephen Hesford: I would categorise the position of the official Opposition as follows: opportunistic, contradictory and wrong. So far, we have had crocodile tears from Conservative Members, although I do not necessarily include the hon. Member for Northampton, South (Mr. Binley) in that. I have to say to some of my own colleagues that there is an element of naivety in the approach to the 10p tax rate conundrum. That has two parts: the issue itself, and all that it means, and the context in which this Finance Bill and the Budget were produced—that of the global economy. We cannot unpick those two elements. It is all much of a muchness in relation to the stability package that the overall Budget was designed to address.
	The right hon. Member for Witney (Mr. Cameron) said in a recent article in  The Daily Telegraph:
	"We would not double the 10 pence tax rate for five million of the lowest-paid families".
	He went on to list a litany of unfunded tax-and-spend promises to the value of about £20 billion. However, having stated that he would not double the 10p tax rate, he did not say what he would do on that issue. The shadow Chief Secretary did not say that either. He hid behind the technical defence—I think, Madam Deputy Speaker, that you were asked about it in several repetitious points of order—that the Opposition cannot table amendments to make positive suggestions on the Budget. That is not what the Opposition are duty bound to do if they are suggesting, as the right hon. Member for Witney suggests, that the abolition of the 10p tax rate is wrong. What the Opposition can do, and I invite the hon. Member for Fareham (Mr. Hoban) to do this in his winding-up speech, is tell us their policy. I know that they cannot put it down in a technical amendment and affect the Finance Bill in that way, but they could tell us their policy on the 10p tax rate, and what they would do about the £7 billion it would cost to vote against the measures in the Bill.
	The contradictory nature of what has been said comes from the hon. Member for Tatton (Mr. Osborne). I do not know the gentleman who wrote an article recently in  The Parliamentary Monitor describing the hon. Member for Tatton as "petulant and unremarkable". Whether he meant that personally or with regard to policy is for hon. Members to decide, but I want to address policy. In a recent article on 8 April, the hon. Gentleman said:
	"Today's generation of bankers, economists and politicians across the Western world are also confronting problems that few had imagined possible even a year ago".
	In other words, the credit crunch could not be foreseen, but that is exactly the contradictory charge that the Opposition have made.

Colin Breed: Is the hon. Gentleman saying that it was perhaps a mistake to announce such a radical change to the tax situation a year before it took place, when the Government could not possibly know the economic circumstances in which that change would take place?

Stephen Hesford: The hon. Gentleman has made his point.
	In the article to which I referred, the hon. Member for Tatton went on to say:
	"We must not rush to rash judgment or premature solutions",
	but that is exactly what the Opposition seek to put forward. The right hon. Member for Witney did so, among a litany of other issues, in the article to which I referred earlier. However, the hon. Member for Tatton went on to contradict himself in his article. Having said that the crisis was not foreseeable even a year ago, he goes on to say:
	"But the warning signs were ignored because under...the old economic consensus all was well."

Brian Binley: Is the hon. Gentleman saying that if a Government cannot take responsibility for global situations in the bad times, they should not claim credit for them in the good times?

Stephen Hesford: The hon. Gentleman's memory is short. During the 10 years that my right hon. Friend the Prime Minister was in post as Chancellor, there were a number of pauses in the global economy, to say the least: the dotcom collapse, the Asian collapse and American problems in the early 2000s. One of the only economies that survived and prospered was this one. The Chancellor was entitled to take some credit for the stability and growth that this Government brought forward from 1997.
	The hon. Member for Tatton, having said that the credit crunch could not have been foreseen, and having claimed that we should have foreseen it, said that we cannot rush to judgment and that not every problem
	"needs a new law or piece of regulation."
	He went on to say that to survive the credit crunch, we must change the rules. Which is it? Does he say that all is well, or does he think that there ought to be intervention of the sort mentioned earlier by my right hon. Friend the Chief Secretary?
	Following that article, the hon. Member for Tatton made a speech at the Policy Exchange on 14 April attacking my right hon. Friend the Prime Minister, saying that his economic legacy had collapsed. He referred to the "three pillars" of my right hon. Friend's economic policy collapsing. That would be a damning indictment if it were accepted by serious commentators in the economic field. When I heard the hon. Gentleman make his speech, I asked myself where this idea of three pillars collapsing came from. Lo and behold, the day before, Lord Lamont had also written an article, for  The Daily Telegraph. No doubt the right hon. Member for Witney—who advised Lord Lamont at a particular time in the life of the previous Government—and the hon. Member for Tatton had got their heads together on the Policy Exchange speech, because Lord Lamont said in his piece of 13 April:
	"Contrary to what the Government have been saying, the UK is not well positioned to withstand this crisis. Whether it be the rise in house prices, mortgage debt...or personal indebtedness".
	That is the line that many papers have run, probably for a month or more. If those were the facts, they would be quite worrying to my constituents.
	I have set out how what the Opposition are saying is opportunistic and contradictory, but it is also wrong. The case made by Lord Lamont is simply wrong. Why do I say that? Ruth Lea, a well-respected economist, but no friend of the Labour party—she never has been and never will be—used to be the finance director for the Institute of Directors, and she contradicted Lord Lamont and the hon. Member for Tatton when she said, very recently, that the British economy was very well placed to withstand the credit crunch in terms of stability. She said that that was the case for three reasons: low interest rates, in contradistinction to circumstances when other credit crunches caused severe recession, pain, negative equity and so on; low inflation; and high and improving levels of employment, a point made earlier by my hon. Friend the Member for Middlesbrough (Sir Stuart Bell)—we now have record employment. Those three factors were completely absent in 1991, 1992 and previous recessions.
	As for other economic commentators, in case there were any doubt about whether the economy is in good shape to withstand the credit crunch, David Smith said last week in  The Sunday Times:
	"If you are in America, with barely any growth, or Italy, with today's election being fought in an economy predicted to grow by only 0.3 per cent., things feel grim...As for Britain, the IMF's forecast of 1.6 per cent. growth for this year and next is stronger than America, plainly, but also outstrips Germany, France, Italy and Japan."
	He went on:
	"It may not be a great prize to win, but over the next two years Britain will vie with Canada to be the strongest-growing economy in the G7."
	That does not fit the description of a country that is acutely vulnerable to the credit crisis.
	David Smith's final point shoots the fox that some newspapers and Opposition Members have been trailing for the past month or so. He comments on the circumstances of credit crunches and squeezes in the past, and analyses three or four previous examples. In summary, he says that, on each and every one of those occasions, the credit crunch lasted for a certain period and was then over, with the economy back on an even keel. He measured three previous credit squeezes as lasting between six and 18 months. He said that we are already seven months into the current credit squeeze, which began roughly in August last year, and, unless those previous historical circumstances—I am talking not about pre-history but about events in the 1990s, 1980s and 1970s—are completely different from our position now, he guesstimates that we will get through it very soon or a little later.
	David Smith therefore says that there are two sets of circumstances. First, the economy is in good enough shape to withstand whatever the credit crunch throws at us, contrary to what Opposition Members argue. Secondly, even if we are more vulnerable, only some months are left, hopefully.  [Interruption.] The hon. Member for Northampton, South laughs. Does he wish to intervene?

Brian Binley: I would love to. I thank the hon. Gentleman but, with respect, "hopefully" is simply not good enough for the many people who are considering starting businesses, those who will make investment decisions about developing such businesses and those whom banks will tell that they cannot have the money to start a business. "Hopefully" is not good enough.

Stephen Hesford: Of course it is uncomfortable, but a Lord Lamont-style rant, which talks down the situation for political gain and makes it appear worse, for political purposes, than it is, will not help. I exempted the hon. Gentleman from my opening remarks, because he has a genuine interest in the small businesses about which he spoke. However, it does not help those small businesses to talk up the credit crunch or talk down the economy—the real economy. David Smith also says that some of the conversations about the credit crunch are divorced from the way in which the real economy works. The small businesses about which the hon. Member for Northampton, South speaks can prosper in and take succour from the stable economy, unbroken since before 1997. The business people whom he forcefully represents want that sort of climate and will prosper in it.
	When considering the removal of the 10p tax rate, we must examine both the proposal itself and the global circumstances in which it is being discussed. Members of all parties refer to the Institute for Fiscal Studies. One of its leading economists said that there are basically three solutions and that, in simple terms, two are simply not affordable. The one that is left is to mitigate the effect on the so-called 5.3 million. The effect cannot be reversed, as the Opposition suggest, but mitigated. Labour Members have pointed out the problem with mitigation, but we have received no help from Opposition Members, who refuse to say what they would do instead. The problem is that several separate components of the electorate are differently affected by the removal of the 10p tax rate, so that mitigation for one sector might not assist another. The House must consider that seriously. My right hon. Friend and neighbour the Member for Birkenhead (Mr. Field) may table an amendment to try to address the mitigation aspect, but could fall into the trap of not dealing with the matter for every one of the 5.3 million. We should not, as the hon. Member for Tatton said about a different matter, rush to judgment.
	What is to be done? My right hon. Friend the Chief Secretary said that the matter would be considered. The Treasury Committee suggested that that could be done in conjunction with it. That may well be a sensible option. However, the matter is much more complicated and serious for the people whom we are considering than we have explored with Opposition Members— unless the hon. Member for Fareham can tell us what he would do in place of removing the 10p tax rate.

Stewart Hosie: I am pleased to follow the hon. Member for Wirral, West (Stephen Hesford), who provided a cheery, upbeat assessment of the economy. I would hate to hear him when he was miserable. However, let me get rid of the delusion that he presented—the denial in his speech and the making light of the credit crunch. The Chancellor told us earlier that he would give the banks £50 billion in Treasury bills in return, at least in part, for US credit card debt; there are tens of billions of Treasury bills in Northern Rock now; there will be £581 billion of cumulative deficit next year—that is in the Red Book, as is next year's £43 billion of debt, and there will be £189 billion of private finance initiative liability, most of it off balance sheet. When the hon. Gentleman talks about the "real economy", he should remember that we have lost a million manufacturing jobs since Labour came to power, and that there is an £87 billion balance of trade deficit in goods and £1.3 trillion of personal debt. We all want to talk up the economy, but let us do it on the basis of—he is a Labour Member and will understand—objective reality. His speech contained no reality.
	On Budget day, I described the Chancellor's speech as a speech from
	"a Chancellor who had no room to manoeuvre."—[ Official Report, 12 March 2008; Vol. 473, c. 345.]
	The clearest indication that we have had of that limited room for manoeuvre is the detail in the Bill, which is another smash-and-grab raid. The Government will take £2 billion extra from business, including £200 million extra from business in Scotland, in the next three years. I will come to the detail of that, but there is also the abolition of the 10p rate. I do not want to claim credit for being the first person to notice that in last year's Budget, but I should like to put it on the record that I mentioned it in my speech on Budget day.
	The Finance Bill sees the Government scrambling around for every penny that they can get from business and people's pockets to plug the holes in the books. I have outlined some of those holes to the hon. Gentleman and will return to them later. The Bill also takes its lead from policy decisions in the previous Budget and the pre-Budget report, which the CBI estimated would take some £5 billion from business, straight into the black hole of the Exchequer. That is the clearest indication that, after 10 years of relatively benign international conditions, relatively stable if unspectacular growth and reasonable inflation, there is nothing left in the tank. Debt levels are far too high and there is no cash reserve to allow the Government to do what is necessary to stimulate the economy when the downturn comes.
	Ministers have said that there is stuff in the Budget and the Finance Bill for business, but where are the measures genuinely to increase investment in research and development? We know that such investment is relatively low in the UK, at about 1.8 per cent. of GDP, as I have said before. Our main competitors have a higher rate, and in Scotland the figure is very low indeed. The Government have done little in the Budget or the Finance Bill to assist R and D. Ministers may point to the small and medium-sized enterprise R and D tax credit increases, as well as the general R and D tax credit increases, from previous Budget measures. That will cost the Exchequer some £70 million this year, and that goes to business; however, that is taken away from business, in yield to the Exchequer, either by the changes to the integral fixtures capital allowances, which will bring in £70 million, or the first year of the phased abolition of the industrial buildings allowance, which brings in £75 million. There is therefore no net gain for business from doing the R and D that they want, and they will have to find the cash to pay for those outgoings.
	By increasing taxes—the small companies rate of corporation tax in particular—and refusing to reconsider proposed changes to capital gains tax, the Government are taking more tax from business at a time when they are making it potentially more difficult to secure investment. I am certain that those measures will worsen the situation in manufacturing, which has seen 1 million jobs lost in the UK since 1997, including 100,000 lost in Scotland and 34,000 lost since 2002.
	Making it more difficult to raise capital and increasing taxes for growing companies, particularly when they are struggling to meet spiralling energy, transportation and raw material costs, will worsen the balance of trade problem. We are talking about an £87 billion deficit in our trade in goods and a £70 billion deficit in our overall balance of trade, which is up £10 billion from £77 billion in the past full year. That deficit affects our ability to grow GDP. Since 2000, we have seen a suppression of GDP of around 0.25 to 0.5 per cent. every year. That means that UK GDP has grown by £30 billion less than it would have, had trade been in balance, which equates to about £1,000 per household. That is another matter that should have been addressed in the Budget and the Finance Bill, but which has not been.
	The Chief Secretary also argued that the Finance Bill was a Finance Bill for the environment—that was when she was actually talking about the Bill. I am not sure whether the Government are right about that. The Bill will defer the April rise in fuel duty until the autumn, which is to be welcomed, but from next year there will be a 1.84p per litre rise and a 0.5p per litre rise above indexation from 2010, as well as a swingeing new vehicle excise duty regime.
	My hon. Friends and I have no objection to using price to discourage unnecessary journeys, to encourage public transport or to encourage freight off the roads, which everyone in the House agrees is sensible. However, many of the Government's measures ignore the fact that so many journeys, of both people and freight, are wholly necessary and that in many areas there is often no alternative. With the Government already taking in excess of 60 per cent. of the price of a litre of fuel in duty and VAT, it remains outrageous that, when there is a windfall, particularly in VAT, and when there is spiking of prices at the pump, that money is not used to moderate the price of fuel.
	I hope at some stage to be able to table amendments to the Bill to do a number of things. The first would be to introduce a fuel tax regulator, in order to use the VAT windfall, first to help generally, secondly to assist remote rural areas, and thirdly and most importantly —I hope that this will command support—to assist the road haulage industry, which is being hammered and is even contractually unable to pass on the fuel prices it is having to pay.
	The second thing that I would like is for the Government to reconsider possible exemptions for working 4x4 vehicles from the new high rates of VED. The Chief Secretary said that growth is continuing, but at a much lower rate than previously forecast. The impact of the lower growth is that Government receipts are forecast to be down £1.2 billion from the pre-Budget report. That did not stop the Chancellor, like his predecessor, boasting about growth in the UK economy. However, it is worth reminding ourselves —particularly the hon. Member for Wirral, West, who believes that this is the best of all possible worlds—that average growth in the OECD has outshone that of the UK in half of the past 10 years and that low-tax economies such as Ireland's have outshone the UK every year since Labour came to power.
	As ever, the Chancellor, like his predecessors, ignored the quarterly downturns in the Scottish economy and the many low and flat growth quarters under the Government's watch. Indeed, average growth in Scotland has been 30 per cent. lower than in the UK over the past 25 years, yet there was nothing in either the Budget or the Finance Bill to assist.
	One of the few areas where the Budget indicated revenue growth was from the North sea. There was an increased tax yield from the North sea, which was based on an average price at the Budget of $83.60 a barrel of oil, which is an increase on the $68 a barrel forecast in the pre-Budget report. As I pointed out at the time, four out of the five closing prices for oil in the week running up to the Budget were record closing prices. The price on Budget day was $94 a barrel, but it has now smashed through the $100 a barrel price. It is worth noting that the Budget forecast £56 billion in revenues over the next six years, as compared with £38 billion over the previous six-year forecast. That massive windfall alone should act as an encouragement for the Government to consider how we might deploy some of the extra revenue generated for a fuel tax regulator, to help people in remote rural areas in particular and the road haulage industry.
	Many Ministers and Government Back Benchers—the ones loyal to the Government, that is—have argued that the Finance Bill was a Bill for stability. Obviously the Budget was so dull and the Bill so appalling that the only watchword that they could come up with was "stability". However, the Bill and the Budget will not provide stability. They are designed to do one thing: to fill the holes in the UK books. There was £37.6 billion of debt, with £43 billion forecast for next year. There was a cumulative debt of £541 billion last year, with a debt of £581 billion forecast this year. The PFI liability last year was £179 billion, with £189 billion of PFI liability this year, for—from memory—only £60 billion of capital projects. That is why our First Minister, my right hon. Friend the Member for Banff and Buchan (Mr. Salmond), described PFI as hyper-expensive and a hyper-waste of money. We need to do something about that, and very quickly.

Michael Jabez Foster: The hon. Gentleman may or may not be right about the current level of borrowing. He has already listed a number of ways in which the Government could spend more or collect less. However, he has not set out how they could spend less in order to balance the books more accurately. What are the cuts that he would suggest in order to achieve the balance that he seeks?

Stewart Hosie: May I remind the hon. Gentleman, who has only just come into the Chamber, that the cumulative debt has been built up not by the Scottish National party, the Conservative party, the Liberal party, the Social Democratic and Labour party, the Ulster Unionist party or the Democratic Unionist party? It has been built up, over a decade, almost exclusively by the British Labour party. I say to the hon. Gentleman with the greatest of respect that we are picking holes in the Finance Bill and finding the things that will not work, and it is for Ministers and for the Government to find solutions to the problems that they have created. [Hon. Members: "Answer!"] There is absolutely no point in their making a meal of things, then expecting someone else to sweep up the rubbish.
	In regard to business, it is interesting that the Government have failed to listen—not to me or to the Tories but to the people on the outside. They have failed to listen to the British Chambers of Commerce on scrapping the plans to raise the small companies rate; they have not done that. They could also have looked again at the plans on capital gains tax, but they have not done so. The Finance Bill will take more money from business. Ministers will say that the baseline capital gains tax rate has been reduced, and that is absolutely correct. That will save business about £5.5 billion. However, almost every penny of that will be clawed back by the changes to general plant and machinery capital allowances. Indeed, this year and next year, the changes to those allowances will outstrip the benefit of the 2p reduction in the basic rate of corporation tax. Businesses will gain no net benefit by investing in their business or their people or, most importantly at this time, by absorbing the increases in the cost of fuel, energy, transportation and raw materials.

Brian Binley: Does the hon. Gentleman agree that, while UK plc will gain from those investment benefits, most small businesses will not, because they do not borrow or invest a sufficient amount of money to get the benefit back?

Stewart Hosie: That is absolutely right, and the same argument applies to the new annual allowance. That is why we in Scotland are delighted that the Scottish National party Government have either slashed or removed the business rates for 150,000 small companies. That is something that we wish could be done down here to benefit similar businesses.
	The Finance Bill also offers us the extraordinary decision to put 59p on a bottle of whisky. That decision has the potential to damage one of the most successful industries at home. It is an industry that generates £2.5 billion surplus for the UK balance of trade. It is one of the few success stories in terms of real exports and real balance of trade surplus. The decision might also damage the industry abroad. When whisky manufacturers, companies, marketers and wholesalers go abroad to argue the case that another country has a discriminatory regime against Scotch, those other countries could turn round and say, "So what? Your Government are doing the same thing."
	I hope that the Government will consider undertaking a proper review of this matter, not necessarily to exempt Scotch from the duty rises this year—although that would be most welcome—but to look again at whether alcohol could be taxed on an equitable basis across the board. The tax, whether it be on wine, beer, cider or spirits, should be levied on the basis of the alcohol content. That would create an absolutely level playing field, irrespective of the type of alcoholic drink.

Michael Connarty: I think that the hon. Gentleman will be pleased that he has given way to me, because I entirely support what he is saying. The latest research shows that a lot of binge drinking involves people being served supersized measures of wine in wine bars. They are deliberately given larger measures in order to make more profit, and the profit is greater because the wine is not taxed in the same way as beer and spirits. Might not the hon. Gentleman's proposal for more equitable taxation also be of benefit in that regard?

Stewart Hosie: The hon. Gentleman is absolutely right about the supersized wine goblets. I have seen them, and I bet that each glass could contain half a bottle. Obviously, he and I would take all night to drink that amount. I have seen these glasses being presented, but I have always declined them— [ Interruption. ] Mostly, anyway.
	My proposal would also address another problem. Super-strength cider is also taxed at a very low rate at the moment, and very strong lager is cheaper to buy than bottled water. My proposal would help to address social issues such as binge drinking and the crime that is associated with it, and I hope that the Treasury will take this matter on board. That is not a partisan point and I will not be calling for swingeing reductions, but I do want an investigation into whether the equitable taxation of alcohol, by alcohol content—irrespective of the type of drink—could be delivered.
	We know that fuel price inflation is about 19.5 per cent. and food price inflation more than 6.5 per cent.

Angus MacNeil: My hon. Friend will be aware of fuel price inflation in my constituency, as my constituents probably pay more tax per litre of petrol than in any other part of the UK and diesel prices at the moment are somewhere between £1.31 and £1.33 a litre. Does my hon. Friend believe that that is sustainable?

Stewart Hosie: It is utterly unsustainable for people in my hon. Friend's constituency and in other remote rural areas throughout the UK. We cannot have parts of the UK paying 33 per cent.—a third—more for a litre of diesel or petrol, which is quite extraordinary. The impact in some remote rural areas, where it happens to be particularly cold among other things, is even worse; the hon. Member for Dumfries and Galloway (Mr. Brown) referred earlier to heating fuel—another issue that the Government must look into.
	Thus, with fuel inflation nearly 20 per cent., food inflation more than 6 per cent. and filling up the tank costing an absolute fortune, what was the social provision in the Budget, feeding through to the Finance Bill? For the first time, we saw child benefit for the first child rise by only 70p and the second child by 45p. I know that it is planned for it to rise to £20 in future years, but when the Minister sums up, I would be grateful if she would explain where the Government intend it to go. Those annual rises—a tin of juice or a packet of crisps for the second child—are really very low. Likewise, the extra £50 winter fuel allowance is welcome, but I am already talking to pensioners who are saying that that amount has been gobbled up already. I hope that at some point, the Government could commit either to making the allowance permanent, which it is not at the moment, or, better still, to rolling up lots of these allowances and delivering a proper living citizens pension.
	I will finish where many of us started—with the abolition of the 10p starting rate. We know that it will be to the detriment of about 500,000 Scottish households in which people earn very little. We know that it is the wrong thing to do, particularly in the light of rising inflation for the necessities of life.

James McGovern: Does the hon. Gentleman accept that as a result of the aspirations of the Scottish National party for Scotland, income tax for every person in the country would go up by 3p in the pound?

Stewart Hosie: I recognise that abolishing the council tax would bring about not only a redistribution, but the largest tax cut for a generation—and almost everybody would benefit from it.
	It is important that we do not play politics with the 10p rate; I want to finish with a constituency case. A lady came to see me on Friday with her husband. She was very upset, having been forced to take early retirement due to ill health. She had not chosen to do so, but was forced to do so. She could simply no longer work. She received her slightly smaller occupational pension, but was not yet at retirement age. She told me that her tax had now gone up, but because she had not quite reached retirement age and her husband had budgeted for her working until retirement, they still faced many large monthly expenditures, particularly the mortgage that they had had for some time. What do I say to that constituent? How do I explain to her that the Government have put up her tax in order to benefit people like myself? That seems wholly unfair and wholly unnecessary.

James McGovern: I am sure that the hon. Gentleman will be aware that the Scotland Act 1998 allows for income tax raising or lowering by the Scottish Executive. Surely, then, his party could deal with this problem at Holyrood.

Stewart Hosie: That amounts to another one of those situations that Labour Members are keen to use: they create a problem and expect someone else to fix it. I am asking the Exchequer Secretary and other Ministers on the Treasury Bench what I should say to my constituent. How do I explain to her that this Government have introduced a new tax regime that will benefit me and everyone in this Chamber, but will make her and her husband worse off? That is the key point. I say to Ministers on the Treasury Bench and indeed to Labour Back Benchers that I hope that a sensible amendment will be brought forward around which everyone can coalesce next week.
	I say that because, although there may be an investigation by the Select Committee, which I would welcome, and although the Government may introduce measures in future Budgets and pre-Budget reports, which may do the job, my constituent cannot wait. She is worried now. She is worse off now. She and I want an answer now.

Michael Meacher: The hon. Member for Dundee, East (Stewart Hosie) made several telling comments across the range of financial and industrial policy. I hope that he will forgive me if I do not follow him down that track, except with respect to his final point, which was about the 10p tax rate. I want, in a short speech, to concentrate on the most politically contentious part of the Bill, arising out of the abolition of the 10p rate. I hope that something of what I say will answer his final point. I want to make proposals that are designed to be helpful in preserving the Government's well-earned record for alleviating poverty while ensuring that there is no shortfall in revenue to the Treasury. It is all very well to propose schemes that will cost money if we are to protect the poorest; the question is where the money comes from.
	The right hon. and learned Member for Folkestone and Hythe (Mr. Howard), who is no longer here, made a most extraordinary speech, purporting to peel away one by one the supposed conspiratorial motives of the Prime Minister. Rather, it reminded me of Salome discarding her veils one by one, although the final revelation of Salome was a great deal more telling than the final disclosure of the right hon. and learned Gentleman. I thought it was patent nonsense.
	The one really positive thing to come out of this afternoon's debate—

Mark Hoban: Will the right hon. Gentleman give way?

Michael Meacher: The hon. Gentleman wishes to defend his former leader.

Mark Hoban: I wish to ask the right hon. Gentleman a question. If he dismisses the arguments made by my right hon. and learned Friend the Member for Folkestone and Hythe (Mr. Howard), does he subscribe to the view either that the former Chancellor, now the Prime Minister, was incompetent in designing a situation with 5.3 million net losers or that he did that deliberately?

Michael Meacher: I do not subscribe to any of the theories that have been pumped out from the Opposition Benches. They are all absurd. If one really wants to find out, the best thing to do is ask the Prime Minister exactly what his reasons were. The absurdities that have been pressed by those on the other side of the House do not do them much credit.
	The one really positive thing that has come out of today's debate is the fact that we agree that we need to look at the wider tax package to decide how we can protect the poorest in our society. That is exactly what I propose to try to address. It is widely and quite properly acknowledged that one of the Government's major achievements has been to remove 750,000 children from poverty. In addition, they have significantly enhanced the incomes of the poorest households, right across the board, through a combination of tax credits, pension credit, the national minimum wage and improving training skills for employment. That is a thoroughly good and reputable record, and it would be a tragedy if the good will that comes from that substantial gain to the poorer half or quarter of society were undermined by this unfortunate mishap over the abolition of the 10p tax rate.

Graham Stuart: Will the right hon. Gentleman give way?

Michael Meacher: I have only just started my speech. The hon. Gentleman likes to bounce up and down, and I will give him one chance.

Graham Stuart: I am extremely grateful to the right hon. Gentleman for giving way. He suggests that everyone has benefited under this Government, yet among working childless households the number of those in poverty has increased by 500,000. How does he explain that?

Michael Meacher: What I am saying is that the incomes of the poorest tenth—the lowest decile—in society have improved significantly, which is very different from what happened after 18 years of Conservative government. I am one of those who would like them to improve considerably more—there are still too many poor people in our society—but the Government have not received proper credit for what they have done.
	I recognise all the problems that many other Members have described. We need to develop a package to protect the lower-paid taxpayers, while at the same time solving the really big problem of how to recoup the potential revenue that would be lost by the Treasury as a result of any such package. I think that that could be done.

Michael Connarty: The hon. Member for Beverley and Holderness (Mr. Stuart) pointed to the fact that many single working people who do not receive any tax credits are in relative poverty because the economy has expanded, and the upper echelons are therefore earning much more than they did before. Should the Government not seriously consider the trade unions' recommendation that the minimum wage should be 50 per cent. of the median wage in the country? That would have started it off at £5 an hour, and would now be giving people enough money not to be in poverty even if they were single.

Michael Meacher: I have always been a supporter of the national minimum wage. Fifteen or 20 years ago, when I was a Back Bencher, I promoted a private Member's Bill proposing its introduction before it was finally introduced by this Government. The rate appears to be slowly increasing—it is now £5.52 an hour—and I believe that, without any loss of employment, it could rapidly be raised to £6.50 and probably to £7. So I rather agree with what my hon. Friend has said.
	The cost of restoring the 10p rate would be £6.6 billion. To concentrate the gain on those in need—the Institute for Fiscal Studies spoke of 5.3 million losers; I do not know whether that is the exact figure, but the number is clearly substantial—one obvious mechanism would be to limit the restoration to poorer taxpayers and those who pay the standard rate of tax. As about 12 per cent. of taxpayers pay the higher rate, that would immediately recoup £2.4 billion. The problem would be how to raise the remaining £4.2 billion. There are several ways in which we could make the tax system a whole lot fairer, and I hope that in Committee next week we can examine amendments suggesting how that could be done.
	It is probably little known that although United Kingdom-based individuals hold some £284 billion in shares or UK-based unit or investment trusts, the total declared disposal value of quoted shares in 2004-05—the last year for which we have figures—was only £5.8 billion, or just 2 per cent. of their shareholdings. It is inconceivable that, on average, their portfolios are changed in total once every 50 years. In fact, it is known that the average market holding at that time was only 14 months. The first strand of a strategy of recoupment for the Treasury could be the ending of what is clearly substantial undeclared share trading on the London stock exchange. Even if individuals traded their portfolios only half as frequently as the actual recorded rate, every 14 months—and we can be certain that that would be an underestimate of the degree to which they trade—if the proceeds were collected, stopping evasion would still raise the revenue take by at least £4 billion a year. Collection could be guaranteed by a requirement for automatic declaration by the stockbroker of all such deals.
	Another remarkable fact is that nearly half all commercial property in the UK—I think the exact figure is 45 per cent.—is now owned by foreign nationals. I have no objection to that. Yet they are unlikely to pay UK tax on their UK property sales, unlike the practice in many other countries where non-residents do pay tax on their property gains. In addition to the revenue lost, that distorts the UK market. Closing this gap by charging capital gains tax on the sales of foreign holdings could well form a second strand of the strategy. Property disposals in 2004-05, in the latest information we have, accounted for nearly a third of all reported capital gains, amounting to £5.3 billion. That suggests that the gains to foreign property owners amounted to some £2.4 billion. Eighteen per cent. capital gains tax would yield nearly a further £0.5 billion.
	My third point is this. It may not be realised that a fifth of all financial assets sold and subject to capital gains tax have been held for less than a year. Gains in terms of liability to capital gains tax, however, are meant to arise on investments, which, by definition, are usually meant to be long-term holdings. Those arising from short-term trades are likely not to have arisen from investments at all. It is clearly right that the profit in that case should be subject to income tax. More than £1 billion of chargeable gains was declared on these disposals in 2004-05 and the percentage rate was only 13 per cent.—a far lower proportion of profit compared with disposals as a whole, which amounted to 52 per cent. Ending that anomaly could also provide the third arm of recoupment for the Treasury and would yield at least a further £0.5 billion.
	Those three actions alone—I am well aware that there are many others—would raise around £5 billion a year and would certainly be more than enough to recover the revenue resulting from restoring the 10p tax rate while concentrating its benefit on the lower paid, which seems the sensible way to do it. Of course I would be the first to say that there are many other options that the Chancellor could equally consider. I want to mention one or two of them very quickly.
	Recent research prepared by Richard Murphy, one of the country's foremost tax experts, found that the 50 largest UK companies almost always pay 5 per cent. less tax on average than they declare on their accounts. As a result, the actual corporation tax rate paid by these UK companies in 2006 was 22.5 per cent., when the rate set by Parliament was 30 per cent. By the end of 2006, the cumulative tax savings recorded in the accounts of the 50 largest companies amounted to no less than a staggering £47 billion from deferred tax charges for which no date of payment is set. The amount actually exceeded the total tax paid by all companies in 2006 by some £2 billion.
	Frankly, it is indefensible that persons on £200 a week should be required to pay more tax when the 50 largest companies each currently receive on average £1 billion a year of tax benefit.  [ Interruption. ] I am being asked to finish in time and I will certainly do so. I will make one further point.
	If these sources of revenue still are insufficient for the purpose—they are more than sufficient in my view—continuing the crackdown on tax haven abuse following the German lead, which I think is very helpful, must be pursued vigorously. It has already led to more than 60,000 people admitting substantial undeclared income in offshore bank accounts in tax havens such as the Channel Islands and the Isle of Man, with, the Revenue expects, the prospect of £500 million in tax recovery. Her Majesty's Revenue and Customs is rightly targeting those who have declined to make a voluntary declaration, and no doubt much more will be brought to light.
	All of this raises the spectre of redistribution from rich to poor, which I am glad has already been mentioned in the debate. That has been a political taboo subject in this country for the past 30 years. However, with inequality between the highest and lowest incomes currently growing faster than at any time in recent history, and also with rapidly increasing food, energy and housing costs for the poorest, redistribution has never been more justified—and it would, at last, signify that we had a Labour Government who really meant business.

Graham Stuart: It is a great pleasure to follow the right hon. Member for Oldham, West and Royton (Mr. Meacher). He correctly says that redistribution has been a political taboo for the past 30 years. However, this Finance Bill brings redistribution out into the light of day, but in exactly the reverse manner to what both he and I would like to see, which is putting first those with least in our society. We should not be looking to punish those who are hard-working and who are already struggling with bills, yet that is exactly what the abolition of the 10p rate does; it doubles the tax on those on low incomes, and it is a direct result of this Government's plans.
	Neither the right hon. Gentleman nor any other Labour Member has been able to give any explanation of why the Prime Minister carried out, when he was Chancellor, this extraordinary raid on those with least in order to get that headline rate and that momentary frisson in the Chamber, cheered by so many Labour Members, when he was seen to cut taxes from 22p to 20p. Why did he do that? Was it to discomfort the Leader of the Opposition for a moment—was he really looking for that brief glimpse of instability on the Conservative Benches? Was it because, after 10 years at the Treasury, he simply did not understand the impact, when he had been given the reports that clearly stated—he did have this information—that 5.3 million people would be affected, including a lot of those with least and those who had been least well served by the changes made by the Government during his time? Did he not realise that it would be those people who would be hit?
	The right hon. Member for Oldham, West and Royton suggested that my right hon. and learned Friend the Member for Folkestone and Hythe (Mr. Howard), a former leader of my party, was indulging in a mad fantasy in his stripping away of the Salome-like veils of the Prime Minister's thinking and motives, but neither the right hon. Gentleman nor any other Labour Member has come up with any more credible theory than my right hon. and learned Friend's damning, if scary, analysis.

Michael Jabez Foster: Will the hon. Gentleman give way?

Graham Stuart: I will do so shortly.
	We were told in 1997 that things could only get better. The incoming Labour Government could not believe their luck: they found that they had a large Commons majority and huge public good will, and that the basket-case economy that Labour had left behind in 1979 had been transformed by the now unpopular Tories into the most dynamic, flexible and fast-growing market economy in Europe. Five years of continuous growth from 1992 meant that Labour's biggest economic challenge was to maintain stability and avoid wrecking what they had inherited.

David Chaytor: Will the hon. Gentleman give way?

Graham Stuart: In a moment, after I have made a little more progress.
	The Labour Government could, therefore, fairly quickly turn their collective mind to the improvement of the lot of their historical and core constituency: the working class. In my speech, I plan to examine this Finance Bill in the context of that mission to improve the lot of hard-working people, and particularly the working poor. The Government have delivered some noticeable successes. The minimum wage dreamt of by Keir Hardie was implemented without the dire employment impacts initially forecast from the Opposition Benches. Economic growth has continued year on year, and employment has grown—even if at a slightly lower rate than under the previous Government of John Major.
	On the back of that, the Prime Minister walked into No. 10 last summer with a reputation as a sound and competent manager of the nation's finances and as someone who cared passionately about the plight of the working poor. During his time as Chancellor, he used the tax and benefit system to increase the average incomes of the poorest tenth of the population by 12 per cent. and cut those of the richest tenth by 6 per cent. Even if he was not allowed to say it in public, he did redistribute wealth. He set ambitious targets for the elimination of child and fuel poverty, and consistently championed his flagship new deal programme.

Michael Jabez Foster: The hon. Gentleman's concern for the poor is touching, but when did the Tory party decide not to investigate further the flat tax, which was all the rage about two years ago?

Graham Stuart: Like a minority of his colleagues on the Labour Benches, but none the less too many, the hon. Gentleman wants to arrogate sole concern for those with the least in our society to his own side. In the most arrogant and patronising way, he wants to suggest that Opposition Members are not as committed as him to creating a fairer and more decent society, not least for those with least. The difference between the two sides of the House is the methods of carrying out that programme; that is what separates us. The Opposition never arrogate moral superiority over Labour Members. We are more interested in delivering something better for the people of this country that will sustain and grow our wealth, not least for the benefit of those who have least in our society.
	The flat tax is a way of looking at creating a more effective tax system. The Conservative party is not closed off to ideology and incapable of looking at new ideas. We will consider any ideas that will create a more dynamic economy, so that we can have a prosperous society for the good of all and first-class public services.

Michael Connarty: I am listening to all the allocations suggested by Conservative Members of tax cuts here and tax cuts there. They know that they are talking about expenditure, but the reality is that in their proposed tax take they are about £10 billion short of the money required for the building programme that this Government are undertaking to repair the damage done and the massive under-investment that took place under the hon. Gentleman's party's Government. Which services does he think could be taken away without affecting the poor—which particular building and which particular service that we have provided? There is a £10 billion gap in what has been said by his party today.

Graham Stuart: One of the great dangers in political life is that, when one repeats a mantra often enough, one starts to believe one's own propaganda. Those figures are entirely invented, and their repetition by Labour Members does not make them true. What is true is that the Bill increases taxes on 5.3 million households. That is the hon. Gentleman's Labour party's record and the legacy of the party of Keir Hardie to people around the country.

Stewart Jackson: Will my hon. Friend give way?

Graham Stuart: If I may, I shall make a little more progress before I give way to my hon. Friend, who I know will have trenchant remarks to make, not least because of the challenges faced by his constituents in Peterborough.
	Imagine my pride when I found myself in Washington DC last week, discussing climate change with various senators and congressmen on the hill. I knew that my Prime Minister was coming, and Pennsylvania avenue was closed, the bunting was out and people were lining the streets. Unfortunately, after a while I realised that it was not for the visit of the Prime Minister but for that of the pontiff. I realised that the Prime Minister's great relaunch from his troubled Government at home had been completely mistimed.
	Of course, the Prime Minister's lack of timing is particularly relevant to the Bill, because it comes just when my constituents are finding it hardest to make ends meet, facing high council tax rises—it has doubled under this Labour Government—and seeing their fuel costs going through the roof. Many of them are shift workers in Hull, having to travel from rural Holderness into work each day, and they are finding the costs enormously hard to bear. Just at this time, when so many people—the very backbone of this country—are struggling most to make ends meet, the Prime Minister decides to hit them with an increase in taxes.
	Lack of timing is in many ways the Prime Minister's weak point, as, equally, is his inability to take responsibility. It was almost comical when he was asked—in the United States, I think—about selling gold at the lowest point in the market for decades, why he had done this and whether he was responsible. He said no, he was not—it was the fault of the previous Conservative Administration. This is a man for whom denial is some kind of speciality.
	The Prime Minister, as Chancellor, came before the Treasury Select Committee and was asked about the change to the 10p rate. One of my hon. Friends asked him to explain to the Committee why, if the economy is doing so well, low earners should lose out. He said:
	"I do not accept your conclusion about low paid workers",
	suggesting that they would not lose out in the end. When asked again about those who would lose out under the change, the then Chancellor said:
	"At the end of the day I do not think we will see the effects that you are saying".
	There was the report of the meeting of the parliamentary Labour party on 1 April—I would be grateful if Labour Members intervened on me about this—at which the Prime Minister was rightly challenged by Labour Members about the impact of the abolition of the 10p rate. He responded by pointing out that no one would be less well off as a result of the 10p tax rate abolition stated in his last Budget. If the right hon. Member for Oldham, West and Royton wants to intervene, perhaps he can share with the House whether that incident took place. Clearly, no one wants to get to their feet. I think that we can conclude from that that the Prime Minister did in fact say that no one was going to lose out—in complete contravention of the truth. I now give way, as I promised, to my hon. Friend the Member for Peterborough (Mr. Jackson).

Stewart Jackson: I thank my hon. Friend for giving way. Does he share my concern at the Government's lack of contrition about the fact that, because of their fiscal policies, they are forcing more of the poorer working people to pay taxes, and at the same time more than 5 million people are on some form of welfare? Their uncontrolled, unfettered immigration policy has meant that more people who want to work in this country are being forced on to benefits.

Graham Stuart: My hon. Friend is of course absolutely right. So few of the benefits of job creation over the past few years have gone to those who voted for this Labour Government in the hope that they would provide benefits to them—benefits in the form not of a girocheque, but of the sustainable work and employment that I know my hon. Friend's constituents would like to see.
	It is noticeable that when the Government were riding high in the polls last year, Labour Members—with a very few honourable exceptions—seemed strangely indifferent to the impact of the abolition of the 10p tax rate on the working poor. It is interesting to note that the reawakening of the Labour party conscience has coincided with plummeting poll ratings and the realisation that many Labour MPs could lose their seats. In preparing for this debate, I decided to look back at last year's Finance Bill debates. Again, with just one honourable exception, there was barely a mention of the Government's decision.
	Britain's families are hurting. They are hurting every time they fill up their cars; they are hurting every time they go shopping; they are hurting every time they receive their council tax bills. They are hurting from a constant barrage of price rises and tax increases. This Budget hits ordinary families up and down the country—people whose only luxuries are having a couple of pints on a Friday night, and who are seeing the price go up, and a week's holiday in the summer.
	On Saturday, I held my normal street surgery in Withernsea, and Joan Kaye came to speak to me about the price rises. She said, "How am I supposed to make ends meet when my income tax is going up from £22 a month to £41 a month?" Her council tax is going up by £5 a month, and her gas and electricity is up by £36 a month. She has at least £60 extra a month to pay out and cannot survive.
	Another constituent e-mailed me this morning, saying:
	"I would like to voice my objection to the abolition of the 10 per cent. tax band. My husband has had to leave work with Alzheimer's...he is 61 and has been retired 2 years. This year I have given up work to be with him."
	Their two pensions take them just out of benefit, and they find that they are worse off. These are the people who are being hit by this Government's attack on the hard-working and those who retire early, often because of illness.

Anne Main: Would my hon. Friend like to pick up on the remarks made by the right hon. Member for Oldham, West and Royton (Mr. Meacher), who described the whole thing as a mishap? As I understand it, a mishap is something that is not planned and happens by accident. If that is really what Labour Members think of their Prime Minister—that he operates by mishap—we should be incredibly worried about this Bill.

Graham Stuart: My hon. Friend is right. Almost every contribution from a Labour Member contained two themes. One is a fury that the Conservative Opposition have not provided the solution so that they can adopt it—after all, they have adopted so many of our policies lately. The other is a complete inability to explain why a Labour Prime Minister, who supposedly has a lifelong commitment to helping working people who have the least in our society, should deliberately bring about this policy. Labour Members have given reasons, such as incompetence—

Anne Main: Mishap.

Graham Stuart: Or indeed mishap. We have not heard a proper explanation, but perhaps the Minister will be able to give us one before we finish this evening.

Lynne Jones: rose—

Graham Stuart: I shall now come to a conclusion.
	This Budget hits ordinary families up and down the country—people whose only wish is to contribute to society, play by the rules and leave a couple of quid to their children when they pass away. They are the bedrock of our society, the people who get up every morning and earn an honest living. That is the constituency that the Prime Minister and the Labour Members who vote for this Finance Bill will have betrayed. They are the millions who gave that Prime Minister the benefit of the doubt last year when, unelected and unopposed, he introduced himself as their new leader. Those millions now find themselves drowning in debt, yet they are being hit for more by a Prime Minister who is both out of touch and out of time.

David Chaytor: It is a pleasure to follow the hon. Member for Beverley and Holderness (Mr. Stuart), although I was deeply disappointed that in his passionate espousal of the cause of the working poor he was not able to remind us what the standard rate of income tax for the working poor was under the previous Tory Government and at what level of earnings that 23p standard rate of income tax kicked in. Before we progress this debate, we must expose the hypocrisy of those on the Conservative Benches when they now talk about the plight of the working poor.
	I feel strongly about some aspects of the elimination of the 10p rate of income tax, but I do not intend to focus my remarks on that. I should say that I associate myself with the general approach adopted by my right hon. Friend the Member for Oldham, West and Royton (Mr. Meacher). He gave the House some specific suggestions on the way forward, and I hope that the Government will consider some of them in the next few days.
	I want to draw attention to the hidden agenda of this Budget. Overall, the Budget is a good one for the vast majority of British people: it supports pensioners, children and families, and it makes the vast majority of British people better off. There is a difficulty with the anomaly of the impact of the abolition of the lower rate on a certain group of people, and I know that many others have discussed that. What this Budget also does, possibly for the first time in 11 years of Labour Budgets, is take seriously the issue of climate change and the environment. Interestingly, although I have not been here for the entire debate I cannot recall a single Conservative Member touching on that issue.
	The Budget of course paves the way for the establishment of five-year carbon budgets. The UK is the first country in the world to adopt that policy. It makes an important commitment that in the third phase of the European Union emissions trading scheme 100 per cent. of permits will be auctioned, which is an enormous improvement on phases one and two; and it recognises that the taxation of aviation has to change from a per person basis to a per plane basis. To their credit, the Opposition have raised that issue over the past year or two, but they chose not to mention it this evening.
	The Budget also takes other important steps forward in respect of transport taxation, particularly the changes to fuel duty and vehicle excise duty, and contains ambitious targets for zero-carbon homes and new buildings. I want to say a word or two in support of fuel duty, because in this House, over many years, fuel duty has been the issue that almost everyone has united against.
	We now need to realise, given not only the urgency of the problem of climate change but the imminence of peak oil, that fuel duty is a sensible, effective, environmentally sustainable and efficient form of taxation. It is socially just, because it impacts least on those who consume the least fuel. It is easy to collect and, in the long term, it will serve to conserve our supplies of fossil fuel, rather than burn them off in a great orgy of consumption.
	I want to put the case for fuel duty, but I do not argue that fuel duty should rise every year infinitely, without any changes to other forms of taxation. What is especially good about the Budget is that it balances a slight increase in fuel duty with a significant reduction in income tax. That is the way forward and, for the first time in 11 years, the Government have started to take seriously the important message about shifting the burden of taxation from the bads to the goods, reducing taxation on income and labour and increasing taxation on pollution, and I welcome that. I am just desperately sorry that the official Opposition, who have tried over the past two years to identify themselves opportunistically with the politics of climate change and the environment, are silent on the really important measures in the Budget.
	I welcome the ambitious targets for zero-carbon buildings. All new homes should be zero-carbon by 2016 and all new commercial buildings by 2019. However, we still have the problem that the overwhelming majority of buildings in the country are not new. Most were built decades ago and, in some cases, centuries ago. We have to do more to address the problem of retrofitting those buildings, because they are the source of the most significant proportion of carbon emissions.
	I know that other hon. Members wish to speak, so I shall conclude my remarks. Although the Budget does the right things in terms of climate change and the environment—it takes huge steps forward—the Government need to do more. We have not yet succeeded in properly explaining to the population as a whole the purpose of this historic shift in the basis of taxation away from taxation of labour to taxation of pollution. My final comment is an appeal to my right hon. Friend the Minister—I am sure that she will pass this on to other Treasury Ministers and the Chancellor—to ensure that taxation goes hand in hand with explanation. If the Government do not take more seriously the need to explain to the citizens of the United Kingdom the urgency of the challenge of climate change and the imminence of the threat of peak oil, we will not be successful in building support for the green tax policies that the Government are now successfully pursuing.

Adam Holloway: My constituency has many low-income families and the focus of my concern is the tax credit system that is supposed to bridge the gap for those on lower incomes when the 10 per cent. band is removed. Other measures will help to bridge the gap, but they will not be introduced until April 2009. They also rely on people applying for and using tax credits. That is a shift from taxing people on income and earnings to the benefit system.
	Instead of a starting rate of tax that helps hard-working individuals and families, we will have a benefits system that is complicated and burdensome, especially for some of the sorts of families we are talking about. I take as an example a family in my constituency—other hon. Members will have many more examples—in which both parents are working. Do we want to encourage them to work and to earn money with a lower starting rate, or do we want them to spend their free time continually fiddling with child tax credit applications and becoming more and more dependent on a benefit culture?
	I want to run past the House some research that illustrates the inefficiency of the processing of tax credits, but before I do I want to pay tribute—as would quite a few other people, I would guess—to the staff on the tax credit hotline and the staff at HMRC, who always had a difficult system to deal with. We have all met constituents—we have sat in their homes surrounded by piles and piles of relevant paperwork—who are trying to make head or tail of their statements and the various amendments. They are unable to persuade the powers that be that they spent overpaid tax credits in good faith. As we all know, those overpayments are often the result of errors on the part of HMRC, and the many people trying to cope with the complicated system.
	There is a dilemma. Should we recover the taxpayers' money that was paid in error to hard-working families who went on to spend that money on essentials, also in error, or should we write off that money, which came from taxes paid by other hard-working families and individuals?
	One reason for highlighting the plight of my constituent, who lives in a tower block and does their best with young children, is that the last thing that working families want to do is to spend additional time fiddling around applying for tax credits and benefits. Shifting the balance from the 10 per cent. rate to tax credits does not help working families. Some families I have met have variable incomes and have multiple jobs to make ends meet. They certainly do not benefit from a shift from the 10 per cent. rate to a need to make tax credit applications, which they must change every time there is a minute adjustment in their employment arrangements. One of my constituents told me that a tax credit office adviser had told them to try to have only one job as it would simplify the tax credits situation. That seems pretty crazy.
	I understand that one idea being mooted by the Government to get out of this hole is to refund unclaimed tax credits, which run into hundreds of millions of pounds. The taxpayer is already owed about £4 billion in overpaid credits, and solving the problem through further use of the woefully inefficient system perfectly highlights the shift towards a long-term benefits-based system that reduces the impetus for people to work. My constituents are paying for the increased inefficiency in the tax credit benefit system, having the burden of the system imposed on them or avoiding the situation altogether because it is too complicated for them to deal with.
	Hard-working families will also be hurt by the abolition of the 10 per cent. starting rate in income tax. In a way, I feel quite sorry for the Government. If the tax credit system had been more competently designed and managed, large numbers of families up and down the country would have been indebted to them for the additional income. As it is, millions of taxpayers are now oblivious to the amount of their money that has been washed down the drain through incompetence. Many thousands of families who are entitled to tax credits are feeling pretty fed up. Those who fund them through their taxes are becoming more aware of the cost and inefficiency of the system. Thousands of people in my constituency will be among the 5.3 million who will lose out through the removal of the 10 per cent. rate. I cannot help agreeing with the right hon. Member for West Dunbartonshire (John McFall) who said a few hours ago that we are penalising poor people completely unnecessarily.

Joan Walley: I am grateful for the opportunity to take two minutes to make a specific point that relates to my constituency. I apologise to the House that I was not present at the start of the debate, but I had urgent constituency business. If I had had the chance to make a long speech, I would have wanted to refer to the 10p tax rate and to have said that I have every confidence that the Government will resolve the matter. I would also have followed the example of my hon. Friend the Member for Bury, North (Mr. Chaytor), and said that the environmental changes in the Budget are far-reaching. It will stand the country in good stead.
	In the minute that I have, I wish to refer to the part of the Finance Bill that deals with industrial buildings allowances, and to ask the Financial Secretary to the Treasury whether, before the Bill's final stages, she could have further talks with the North Staffordshire chamber of commerce and industry and the Minister for the West Midlands, who has concerns about manufacturing in the area. As for the ways in which the Budget and the Bill are designed to deliver increased investment and growth overall, will the Financial Secretary look specifically at clause 82 and the removal of industrial buildings allowances for manufacturing areas such as the one that I represent? The measure is being applied retrospectively, and that could have an adverse effect on small family firms that have invested in manufacturing and are resisting the temptation to move and invest abroad. They are, and want to continue to be, part of the UK economy. Will she consider the effect that the clause will have on small family businesses? I am most grateful to her for her attention to the issue.

Greg Clark: Last night, I received an e-mail from one of my constituents, who said:
	"I am one of the unfortunate people who will be hit by the abolition of the 10 per cent. tax band. I am a single man of 30 years, on a salary of only £13,000 a year working full time as a teaching assistant. I cannot afford to have a home of my own and am still living with my parents. If the Labour Government say they will support or help those hit by this ridiculous fiasco you bet that I will not be one of them as a single man...Please make my comments known in Parliament."
	I am delighted to have the chance to do that, because my constituent is representative of a number of people in my constituency who have been in contact with me, and of others across the country.
	It is extraordinary that in his final Budget as Chancellor, the Prime Minister, having cast around for people to raid for revenue, should have alighted on the least well-off who are employed. He has always said, and asked us to believe, that work is the best way out of poverty. What kind of message does it send when those who are targeted are precisely those who are in work but who are earning the smallest possible amount? Is that a wholesale reversal of his mantra over the years?
	There is an almost grotesque irony in the fact that the group hit hardest by the increase in tax are people on the Government's official poverty line. The amount at which a single person will be hit is £149 a week; £145 a week is the official poverty line for a single man. The Government have targeted those on the poverty line to raise revenue. Of course we can argue about whom we can best help when distributing the Treasury's occasional largesse, but for people in the Treasury to have a discussion about which people should be tackled and hit hardest, and come up with the answer that it is low-paid people on the poverty line, is so extraordinary that it beggars belief.
	As for how the issue can be resolved, of course the review that has been mentioned will no doubt involve discussion of tax credits and the question of how we can put more money into child tax credits. However, as my constituent made clear in his e-mail, there are people across the country in deep poverty who do not have children. Their poverty should be our concern, just as other people's poverty is. Child poverty is to be tackled, but adult poverty is booming. Severe poverty—people on incomes of less than 40 per cent. of the median across the economy—has hit a 30-year record under this Government, and is increasing all the time. Surely our aim should be to rescue them from poverty, as well as to tackle child poverty. We should not get into a situation in which we can take adults out of poverty only by making them dependent on their children. That is not right, and it is not a sustainable way forward.

Kelvin Hopkins: Can the hon. Gentleman remind me which Government raised VAT—a regressive tax—from 8 per cent. to 17.5 per cent., broke the link with earnings for pensioners and saw child poverty rocket?

Greg Clark: The hon. Gentleman's constituents in Luton will be delighted that he has chosen a debate on a practical matter, about which I am sure they have written to him, to rehearse tired arguments that are 20 and 30 years old rather than deal with the problem in hand.
	I suggest that we deal with the problem in hand. Ministers on the Treasury Bench should give some indication of how they intend to get out of the mess that they have got into. They should not pretend that there are no means available to do that. The calamitous Budget that resulted in this situation had implications for charities too; I should say that I am a Front-Bench spokesman on charities. Charities were caught up in the issue of whether the circumstances were unforeseen or, as my right hon. and learned Friend the Member for Folkestone and Hythe (Mr. Howard) said in his masterful speech, the result of a rather more cunning enterprise—to raise revenue without disclosing its source.
	Charities found that they would be paying £70 million a year, given the reduction in gift aid coming from the reduction in the basic rate. The then Chancellor kept quiet about that in his Budget speech, but in this year's Budget the Chancellor came forward with a package of £285 million to relieve charities for a limited, three-year period. The Treasury was exercised and busy in trying to find a way to get charities out of the mess that it had created for them, but what was wrong with the low- paid? Why could the Treasury not give them the thought and attention that it gave charities? Why have the Chancellor and Prime Minister said that they will start thinking about that now? Why did they not do that before the most recent Budget? Why do we have to wait for the pre-Budget report and the Budget after that?
	I am conscious that time is short. It is lamentable that the Government have chosen to hit our pensioners, and the very people whom we want to encourage into work and give the best start, with this doubling of tax. If that was a mistake, the Government should admit it; if it was deliberate, they should recant it. I hope that on Monday practical steps will be taken immediately to address the serious problem that faces my constituents and others around the country.

Mark Hoban: This has been an important debate. Before I turn to the substance of my remarks, I want to comment on some of the speeches made by right hon. and hon. Members on both sides of the House. The Chairman of the Treasury Committee offered an olive branch to the Government—although the Chief Secretary to the Treasury seemed to bat it away— by suggesting that the Committee, rather than the Treasury, might look at the number of losers from the abolition of the 10p tax rate. The Chairman also highlighted the risk that the changes in the rules on non-doms will create a culture of non-compliance among those on low incomes.
	The hon. Member for Taunton (Mr. Browne) spoke for 32 minutes. It was a speech long on style, short on substance and composed almost entirely of extracts from other people's speeches and articles—and one joke, which badly misfired. The hon. Member for Middlesbrough (Sir Stuart Bell) spoke about the net losers from the tax changes. He doubted whether 5.3 million people were affected, but as the Financial Secretary knows from her own parliamentary questions, 5.3 million households are net losers from the scrapping of the 10p rate.
	In a characteristically forensic speech, my right hon. and learned Friend the Member for Folkestone and Hythe (Mr. Howard) threw out a challenge to those on the Labour Benches. He came up with his own analysis of why the former Chancellor might have decided in his final Budget to scrap the 10p rate. Labour Members could not come up with their own explanation for why he might have done that.

Anne Main: It was a mishap.

Mark Hoban: Some say that it was a mishap. I asked the hon. Member for Dumfries and Galloway (Mr. Brown) whether the scrapping of the rate was due to incompetence—but that, apparently, was not the answer. Labour Members could not admit that it was deliberate, calculated and well worked through. The challenge that they face is to explain to the House and to their constituents why, in his last Budget, the then Chancellor went ahead with this measure, which would penalise 5.3 million households.

Lynne Jones: In fact, I addressed that issue in my speech on Budget day 2007; I suggest that the hon. Gentleman read it. He is concerned about those who have lost out, as was the hon. Member for Tunbridge Wells (Greg Clark), who looked for practical measures to help them. Yet the hon. Gentlemen did not support the amendment tabled last year by my right hon. Friend the Member for Birkenhead (Mr. Field). Earlier, the shadow Chief Secretary misrepresented—

Mr. Speaker: Order. Interventions should be short.

Mark Hoban: Given that the hon. Lady says that I should refer to the speech that she made in 2007, she might wish to read the remarks of my hon. Friend the Member for Runnymede and Weybridge (Mr. Hammond), in which he set out very clearly why we did not vote on last year's amendments.
	The hon. Member for Barnsley, Central (Mr. Illsley), who spoke about the damage that the Budget will cause to the licensed trade, echoed the remarks made by the Under-Secretary of State for Culture, Media and Sport in the  Morning Advertiser—until, of course, he had to recant and say that his comments did not represent his views. Clearly, the call from No. 10 that kept the hon. Member for Sheffield, Hillsborough (Ms Smith) on the Government team also worked in his case.
	My hon. Friend the Member for Altrincham and Sale, West (Mr. Brady) talked about a Budget without a theme and expressed the view that perhaps the Government held off on increasing fuel duties because they understood that taxes were starting to be painful. My hon. Friend the Member for Northampton, South (Mr. Binley) spoke about the challenges posed in this Budget to small businesses and the increase in the rate of taxation for small companies.
	The speech by the hon. Member for Wirral, West (Stephen Hesford) was rather like that of the hon. Member for Taunton, except that there was no style and no substance. The hon. Member for Dundee, East (Stewart Hosie) highlighted the fact that there was no room for manoeuvre in this Budget—a message that we have been hammering out for the past few months. I am pleased to find that he is on board on that. The right hon. Member for Oldham, West and Royton (Mr. Meacher) gave a remarkable shopping list of tax increases that demonstrated exactly why he could not find the supporters to stand against the Prime Minister for the leadership of the Labour party.
	My hon. Friend the Member for Beverley and Holderness (Mr. Stuart) again highlighted the fact that no Labour Members could explain the changes announced in last year's Budget leading to 5.3 million households losing out. The hon. Member for Bury, North (Mr. Chaytor) discussed environmental taxes. Conservative Members believe that new revenues raised from environmental taxes should be used to reduce the burden of taxation on families, unlike the appalling measures put forward by this Government, who put a green gloss on environmental taxes. My hon. Friends the Member for Gravesham (Mr. Holloway) and for Tunbridge Wells (Greg Clark) also highlighted the issue of people who have lost out as a consequence of the abolition of the 10p rate.
	The focus of today's debate has been on the announcements made not by this Chancellor but by his predecessor in last year's Budget. The pitfalls of scrapping the 10p rate were pointed out last year, but the argument has gathered momentum as people have started to realise its impact. Members in all parts of the House will have had letters and e-mails from constituents about it. It has cropped up on doorsteps time and again over the past few weeks, as those on low incomes who do not qualify for or do not take up tax and pension credits work out that they are worse off as a consequence of scrapping the 10p rate. A constituent who wrote to me last week told me that she earns £15,000 a year and works for only 30 hours a week so as to help to look after her mother. She asked me to raise in Parliament what she felt was the unfairness of the new income tax rates for people such as herself who have contributed into the system for all their working lives only to be let down by the Government once again—a view that many thousands of people up and down the country have expressed over the past few months.
	Hard-working people on low incomes feel penalised by this measure. It is no wonder that 70 Labour MPs have signed early-day motions critical of the scrapping of the 10p rate and that Parliamentary Private Secretaries and ex-Ministers are queuing up to criticise it, with the exception of the Prime Minister's PPS—the only PPS who was wheeled into the Chamber to support the scrapping of the 10p rate.

Ian Austin: I am very grateful to the hon. Gentleman for giving way. Instead of the pathetic, schoolboy debating society wisecracks we got from the shadow Chief Secretary, can he tell us why anyone should take seriously his party's new-found concern for the poor, when its top priorities for tax reform are dealing with inheritance tax, to give a big tax cut to millionaires such as the shadow Chancellor and the Leader of the Opposition, and the abolition of stamp duty on shares for hard-pressed millionaire City traders? At the same time, will the hon. Gentleman tell us how he voted on the minimum wage, the introduction of tax credits—

Mr. Speaker: Order. Perhaps the hon. Gentleman can write to the hon. Member, because his intervention is too long.

Mark Hoban: I gave the Prime Minister's PPS the opportunity to speak—I think he is the first Prime Minister's PPS to speak in a debate in this House and refer back to his crib sheet, which he also had to refer to earlier. Let me remind him of the centrepiece of the pre-Budget report in October: a change in the rules on inheritance tax. We will not take any lessons from him on these matters. Of course, the hon. Gentleman is part of the problem: the constant listing of briefings and changes of mind. The Exchequer Secretary said "Watch this space" on Friday. The Chief Secretary was on the airwaves on Saturday, trying to pretend that nothing was going to change.
	Today, we have a new line—the "jam tomorrow" line. The argument is: "We don't have the time to sort this crisis out before Monday. Just wait till the pre-Budget report and we will sort it all out then." But this is not a problem that has suddenly emerged in the past few days. No one can pretend that this crisis came as a surprise. The Prime Minister and the Treasury knew last year that a net 5.3 million households would be worse off as a consequence of the abolition of the 10p rate. In fact, the Exchequer Secretary herself was signatory to a Treasury Committee report of last year that was highly critical of the decision to scrap the 10p rate—it cropped up during our debates on the Budget and the Finance Bill last year.
	The Government have had plenty of time to put together a package to soften the blow for the losers. Let us not forget how quickly the Government can move when they want to. They quickly backtracked on non-doms, and let us remember how quickly they reversed their position on inheritance tax, after facing pressure from business. Why is it that the 5.3 million households who have lost out have to wait until the PBR? Why do they have to wait, when the Government can move so quickly if they want to?
	Why should the people affected believe that there will be jam tomorrow? As the Institute for Fiscal Studies points out, the number of childless, working age adults in poverty has increased by half a million since 1997. They are not going to listen to the promises, hints and suggestions made by the Treasury and the Prime Minister. They want prompt action, and I suggest that Labour Members hold their Ministers to account on the matter, because the pressure put on the Treasury during the past few weeks has clearly started to create movement.

Rob Marris: Several of us have raised this very issue with the Government for the past 12 months. The hon. Gentleman is absolutely right to say that this issue has been around for 13 months, since the 2007 Budget, but we still have no comprehensive alternative policies from the official Opposition.

Mark Hoban: I would have expected the hon. Gentleman, for whom I have a great deal of respect, to come up with a better intervention than that. If this problem has been around for so long, why have the Government not responded? Why have they not listened to Labour Back Benchers? Why have they not listened to the Parliamentary Private Secretaries who have been writing letters to complain about it? The Government did not budge on a single thing about it until they realised that they had a large-scale rebellion on their hands, and if Labour Members want to put pressure on the Government to get prompt action, they should continue to push the Government to change their mind.
	There are many other measures that we could discuss, including the small companies rate; changes to capital gains tax; non-doms; raising taxes for families; putting a green gloss on the Budget; and using an attack on binge drinking to increase taxes on alcohol. However, the challenge for the Government is scrapping the 10p rate, to which there is widespread opposition. We heard that tonight, not only from the Opposition Benches, but from Labour Members.
	Last year, the Government put together a package to ensure that people over 65 or those with young children would not lose out by scrapping the 10p rate. However, that left 5.3 million households losing out, including those who have retired early, young people on low incomes who do not qualify for tax credits, and those who are over 25 and on low incomes, but have no children and do not claim tax credits. The challenge that the Chancellor faces is whether he can help those 5.3 million households this year. Can he act to remedy the unfairness of last year's Budget in the Bill? As Labour Members know, the Government have no excuse not to act. The problem is not new; they have known about it for a year and they can act quickly when they wish. They can back down just as they did when they compromised on non-doms, retreated on capital gains tax and reversed their policy of reducing taxes on small companies.
	The Government should do the right thing for families and businesses in times of economic uncertainty, when they are finding it harder to meet ever-higher costs, including increased fuel prices and council taxes. By opposing the Bill, we are telling businesses and families that we are on their side, while the Government are on their backs.

Jane Kennedy: It is a pleasure to bring to a close the Second Reading of this year's Finance Bill, and I thank all hon. Members who have contributed. My right hon. Friend the Chief Secretary gave a forthright presentation of the benefits of the Bill, and I compliment the hon. Members for Runnymede and Weybridge (Mr. Hammond) and for Taunton (Mr. Browne) on their robust presentations of their parties' positions. I welcome the speeches of all those, especially Conservative Members, who expressed a keen interest in the poor and the impact, as they perceive it, of the Budget on some poor people in Britain. It is one of the Government's successes that we have turned the agenda around so that poverty is now at the centre of debate. I welcome that.
	As one would expect with such a wide-ranging Bill, several points have been made and I would like to respond to as many as possible, within the constraints of time. However, before dealing with those points, I would like to address the changes that the Bill makes to income tax and restate the context in which the debate takes place.
	The introduction of the starting rate of income tax in 1999 was an important step in providing incentives for people to work, along with the reduction in the basic rate of tax to 22 per cent. and a set of changes that took 900,000 low paid workers out of paying national insurance contributions. However, the 10p rate is a poorly targeted way of helping people on low incomes. It benefits the very highest earners, but not the very lowest earners, who pay no tax. Since 1999, we have been developing a far more targeted way of making work pay for people on low incomes, and of providing them with support.
	Our tax credits system—the working tax credit and the child tax credit—now supports 6 million families across the country. The changes to income tax in the Bill have to be seen as part of a package that puts additional resources into those tax credits. The child element of the child tax credit has been increased by £150 a year above inflation this month, and the income threshold up to which working tax credit is received in full has increased by £1,200.

Graham Stuart: Will the Financial Secretary give way?

Jane Kennedy: Whenever I see the hon. Gentleman bouncing up and down, I think of the old adage that empty vessels make the most noise. However, he occasionally makes interesting contributions, as his speech today showed. If he will allow me to make a few more comments, I will take interventions.
	The changes to income tax in the Bill must be seen as part of a package that puts additional resources into those tax credits. The child element of the child tax credit has been increased, as I said. Those changes mean that 3 million of Britain's 7 million families with children will now have their income tax liability effectively wiped out by the tax credits and child benefit that they receive. Together with the changes in the National Insurance Contributions Bill, which is before another place, the above-inflation increases in personal allowances for pensioners and the reduction in the basic rate of income to 20 per cent., those changes were designed to interact as a package.
	As my hon. Friends the Members for Middlesbrough (Sir Stuart Bell) and for Dumfries and Galloway (Mr. Brown) said, the overall impact of those changes is to provide more support for families and pensioners. Some 80 per cent. of families with children will be better off, 200,000 children will be lifted above the poverty line and 600,000 pensioners will be taken out of paying income tax, meaning that 59 per cent. of pensioners aged 65 and over will get their incomes free of tax.

Graham Stuart: rose—

Hon. Members: Give way!

Jane Kennedy: I will give way in just one moment.
	We have of course carefully considered the impacts of the package. It was I who gave my right hon. Friend the Member for Birkenhead (Mr. Field) a detailed answer on 18 October about those who gained and those who lost as a result of the overall package. I acknowledge that some of those people are in households in receipt of low incomes— [ Interruption. ] Yes, some of them. We are acutely conscious of the possible impact on the low paid. We have of course considered ways of compensating those groups. However, that would be not only difficult to achieve, but disproportionately expensive in many cases. We cannot target—

Graham Stuart: rose—

Hon. Members: Give way!

Jane Kennedy: Hon. Members who have just come into the debate might want to give me one more minute.
	We cannot target tax measures at the specific groups that have lost out, and so any changes would also benefit people who have already gained from the package, taking valuable resources away from elsewhere.

Graham Stuart: I am extremely grateful to the Minister, who was partly gracious in her answer. It is not empty vessels bouncing up in the Chamber, but the empty promises of the Labour party that most concern my constituents. What policies and funding need to be put in place to meet the Government's target of halving child poverty by 2010-11? Are those policies in place and will she ensure that that commitment is met, or is the Treasury Committee right that the Government have lost their wholehearted commitment to reducing child poverty?

Jane Kennedy: If the hon. Gentleman is as committed to eradicating poverty as he claims, I would have hoped that he would acknowledge the steps that we took in the Budget to lift the families of a further 200,000 children above the poverty line. Our approach to the Finance Bill and the Budget has been carefully constructed precisely to enable us to make that progress in tackling child poverty, which his party was responsible for more than doubling when they were in power in the 1980s and 1990s.
	If we were to amend the criteria for tax credits, for example, to make more people eligible, we would also reduce their effectiveness in specifically targeting those at the greatest risk of poverty, such as low-income families with children. Again, those changes would also be expensive.
	My right hon. Friend the Member for West Dunbartonshire (John McFall) not only spoke on his own behalf, but drew attention to the Treasury Committee's report. I should like to quote something that he said in an interview:
	"While tax simplification is a laudable aim, it seems strange that the abolition of the 10 pence starting rate of income tax disadvantages mainly low income households. As such, the Government must ensure that these people are identified, and appropriate help given to them to ensure they receive the benefits to which they are entitled."
	I welcome what he said earlier, as well as any contribution that he and his Committee might make to the process. I completely take his point about ensuring that we work harder to ensure that those who are entitled to, for example, the benefit of tax credits, and working tax credits in particular, receive the entitlement that they deserve. It may well be that many people who fear that they will lose as a result of the proposed change would not be in that position if they were claiming the working tax credits to which they are entitled.
	My hon. Friend the Member for Barnsley, Central (Mr. Illsley) and others said that we could not wait until the pre-Budget report, but nor can we unpick the tax package without unravelling its benefits.
	The hon. Member for Tiverton and Honiton (Angela Browning) and others mentioned pensioners who have taken early retirement. I want to say a word about those in the 60 to 65 age group. About a third of the women in that age group who are affected will be in two-earner households. It is therefore not true to say—as the right hon. and learned Member for Folkestone and Hythe (Mr. Howard) did, in what I acknowledge was a powerful speech, from an Opposition point of view—that 5.3 million of our poorest families will see their taxes double. That is how he and his colleagues characterise the situation, but it is not true. The make-up of those who will, overall, pay a relatively small increase in taxes is diverse, and that is why it is difficult to say exactly who they are, and why it is difficult to devise a set of measures to ameliorate the effect of the changes.
	Overall, this is a package that provides targeted support to the families and pensioners who need it most— [ Interruption. ] Hon. Members do not have to shout and bawl. I am under enormous time pressure.

Greg Clark: rose—

Jane Kennedy: I will of course give way, but hon. Members do not have to shout in order to make their point.

Greg Clark: Will the Minister confirm that, as a result of the abolition of the 10p rate, 300,000 more people will be in poverty— [ Interruption. ]

Jane Kennedy: I listened carefully to the contribution that the hon. Gentleman made earlier, but I did not hear what he just said. Please could he restate what he just asked, because I did not hear it?

Greg Clark: Is the Minister aware that the abolition of the 10p rate will put another 300,000 people in poverty?

Jane Kennedy: No, I do not accept the figure that the hon. Gentleman is offering. I have said that I do not recognise it. All the work that we are focused on—and the whole of the tax package—is centred around the Government achieving their priorities of ensuring that pensioners and children in poverty receive the help that they deserve.

Greg Clark: rose—

Jane Kennedy: I am not going to give way to the hon. Gentleman again.
	In last year's Finance Bill debate, on 30 April, the—

Nicholas Soames: Will the right hon. Lady give way?

Jane Kennedy: I cannot refuse.

Nicholas Soames: May I congratulate the right hon. Lady on her magnificent speech? Would she be good enough to tell the House her figure for the number of people who will be put into poverty by this change?

Jane Kennedy: I do not accept the proposition— [ Interruption. ] It is always a pleasure to welcome the hon. Gentleman to the debate, but it is interesting to see him joining those who are defending the poor.
	In last year's debate, the spokesman for the Conservatives, the hon. Member for Chipping Barnet (Mrs. Villiers), commented on the proposals put forward by the Liberal Democrats that the 10p income tax band should be replaced by a 0 per cent. tax band.
	She said:
	"Our primary concern about them is that they have not been properly costed, so it would not be fiscally responsible to vote in favour of them."—[ Official Report, 30 April 2007; Vol. 459, c. 1276.]
	I put it to the House that it would be fiscally irresponsible to unpick the package presented in this Finance Bill; we cannot do it. However, my right hon. Friend the Chancellor has made it clear that he understands the concerns expressed and that we want to do more to help many of those who do not benefit from the package.
	The Conservative party likes to say and has said—though I was quite surprised to hear Conservative Members say it—that we have lost our moral way and that the moral compass of the Government has lost its direction. In that context, let me say this. When I was elected in 1992, one in four men aged 25 and over in my constituency were unemployed, yet unemployment in this country is now almost a thing of the past, particularly among the young people I represent in my constituency. Even if we had not fixed unemployment, or even if we had addressed only the scourge of unemployment and not built the schools and hospitals and not put in the investment in public services that we have, I would still be incredibly proud to be taking forward a Finance Bill on behalf of this Government, who have achieved so much. I hope that the House will support the Government in these measures, which we will take forward next week.

Question put, That the Bill be now read a Second time:—
	 The House divided: Ayes 298, Noes 223.

Question accordingly agreed to.
	 Bill read a Second time .
	 Ordered,
	That—
	(1) Clauses 3, 5, 6, 15, 21, 49, 90 and 117 and new Clauses amending section 74 of the Finance Act 2003 be committed to a Committee of the whole House;
	(2) the remainder of the Bill be committed to a Public Bill Committee; and
	(3) when the provisions of the Bill considered by the Committee of the whole House and the Public Bill Committee have been reported to the House, the Bill be proceeded with as if it had been reported as a whole to the House from the Public Bill Committee.—[ Jane Kennedy.]
	 Committee tomorrow.

COMMITTEE

Finance Bill

Ordered,
	That the Finance Bill Committee shall have leave to sit twice on the first day on which it meets.— [ Liz Blackman. ]

Delegated Legislation

Motion made, and Question put forthwith, pursuant to Standing Order  No.  118(6) (Delegated Legislation Committees),

Land Registration

That the draft Land Registration (Network Access) Rules 2008, which were laid before this House on 5th March, be approved.— [Liz Blackman.]
	 Question agreed to.

PETITION

Nurseries Code of Practice

David Burrowes: I beg leave to present a petition on behalf of 2,712 constituents, representing concerned professionals in the nursery sector, parents and members of the public from Enfield, Southgate. The basis of their concern is the new nurseries code of practice, its rigid one-size-fits-all criteria and a shortfall in funding likely to lead to the loss of choice of nursery care and free provision.
	The petition states:
	The Petition of professionals in the nursery sector, concerned parents and members of the public,
	Declares that nurseries, pre-schools and day-care providers fulfil a vital role in the development of pre-school children and that voluntary, private and independent nurseries provide the overwhelming majority of nursery care. The Government's new code of practice fundamentally changes the rules regarding the provision of free nursery places for three and four year olds. They are concerned that the new code of practice could cause significant financial harm and insecurity in the nursery sector, and force existing, trusted nurseries out of business, creating uncertainty for parents and children.
	The Petitioners therefore request that the House of Commons urges the Government to halt the implementation of this code of practice and undertake an urgent assessment of its impact on nurseries.
	And the Petitioners remain, etc.
	[P000139]

A417 TRAFFIC IMPROVEMENT SCHEME

Motion made, and Question proposed, That this House do now adjourn.— [Liz Blackman.]

Geoffrey Clifton-Brown: May I thank you, Madam Deputy Speaker, and Mr. Speaker for allowing me to bring this matter before the House today? I also thank the Minister for being present to respond to my comments—I have given him good warning of what I will say—and my neighbour and good friend, my hon. Friend the Member for Tewkesbury (Mr. Robertson), for being here to support me.
	As I am sure the Minister is aware, this is not the first time that I have spoken in such a debate on this issue, which has unfortunately been going on since 1994, and progress on which is about as slow-moving as the traffic on the road. If the Cotswolds had not just been hit by 12 post office closures, I would describe this as the biggest constituency issue I have faced in my time as a Member of Parliament.
	I would like briefly to describe the problem. The A417/419 leaves the M4 at junction 15, bypasses Swindon, Cirencester and Gloucester, and joins the M5 at junction 11A. In other words, it is the apex of the triangle that joins the M4 and M5 so that traffic travelling between Swindon and Gloucester does not have to go all the way round two sides of the triangle via Bristol, thus saving 40 miles. The so-called missing link is the three and half miles in the middle that is the single carriageway between the two junctions. Therefore, this problem clearly has national, regional and county-level significance.
	In 1994, I stood with the then transport Minister, John Watts, at the opening of the Brockworth bypass on this stretch of road. With both the Swindon and Gloucester ends of the road having been built, and with £150 million having been spent—then a huge sum of money—it was confidently predicted that this missing link would be built. Unfortunately, however, matters have not progressed.
	Wrangling has occurred ever since over various possible solutions, one of which was the suggestion of a tunnel, which I believe has now been rejected even by most of its ardent supporters, given the physical and financial logistics stacked against it. Instead, in 2004 the Highways Agency presented a £150-million surface project, the so-called brown route, about which my hon. Friend will be well aware as he and I have attended meetings with the Highways Agency to discuss it.
	Following the 2004 publication by the Highways Agency, Gloucestershire county council consulted the community on the available options. At that time, 67 per cent. of the population and 90 per cent. of the business community were in favour of the brown route. Despite that, the scheme did not receive regional prioritisation. I believe that if a similar poll were carried out today there would be an even higher level of support from the local population, and certainly from the business community, because the Gloucester business park is expanding at one of the fastest rates in the country, and housing in both Swindon and Gloucester is expanding at a huge rate. Indeed, all the authorities now support the building of the missing link—the county, district and parish councils—as do five Gloucestershire Members of Parliament.
	As the House may be aware, on 11 October 2006 I had an Adjournment debate on this subject, during which the then Minister with responsibility for transport, the hon. Member for South Thanet (Dr. Ladyman), undertook to ask his Department to instruct the Highways Agency to search for and consider the best available surface option. It is on the back of its excellent and detailed report, published in March this year, that I have called today's debate, in order to see how we can take this matter forward.
	The Minister, whom I am grateful to see in his place today, will be aware that during the last Adjournment debate, I pointed out that the south-west region adjoins three other regions. In this respect, the situation is unique. In considering these very big regions, we should remember that this scheme is only 14.5 miles from the Welsh region border, 6.5 miles from the south-east region border and 11.2 miles from the west midlands region border. It is therefore very close to four regions in total, and it is this factor that causes a weakness in the regional transport prioritisation for delivering road schemes. This is a problem, given that the south-west region is so large. Chipping Campden and the constituency of my hon. Friend the Member for Tewkesbury are closer to the border of Scotland than they are to Land's End, at the south-western tip of the south-west region. That demonstrates how big the south-west region is.
	This scheme will benefit the south-west, as the current bottleneck at the top of the region affects the growth and prosperity of the whole region. However, the critical point of this whole debate is that, because the scheme benefits four regions, it becomes no one region's priority. Under a system in which roads are delivered only if they can achieve regional priority, this scheme will never be delivered unless we have some form of national priority.
	During my Adjournment debate in October 2006, the then Minister with responsibility for transport stated the following regarding the regional funding allocation process:
	"I acknowledge that there were problems, some of which related to schemes on the edge of regions that might not seem of such central importance to the region. Sometimes a scheme might be located in one region but its importance might be to another, so it is not given priority."—[ Official Report, Westminster Hall, 11 October 2006; Vol. 450, c. 102WH.]
	He went on to confirm that two schemes were put to him: the A417 and the M5. He gave the M5 national priority, while the A417 and the missing link were given regional priority. He conceded in the debate that he might have got that decision wrong, and that he would reflect on it.
	Perhaps now is a suitable time to explain exactly why I have campaigned so long and hard for this improvement to be made. The missing link is the only section of single-lane road in a dual carriageway that runs from Palermo in Sicily up to Perth in Scotland. One need only scan briefly the 2008 review by the Highways Agency to understand the significance of this road economically and environmentally, but surely most importantly on the ground of safety.
	For those of my constituents and those of my hon. Friend who are forced to use the road regularly, I am afraid that the facts are frightening. More than 30 deaths or serious injuries have occurred in the past decade; tragically, the most recent death was just last month. Speaking following this fatality, Inspector Dave Collicott of the county's road policing unit told the local media that
	"the likelihood of this collision would have been reduced had this section been to the same standard as those on either side of it".
	Accidents happen with unfailing regularity. The really significant point is that this section of road has an accident rate 30 per cent. higher than the national average. The Minister will note from the report that "107 personal injury accidents" were
	"recorded over the 5 year period to October 2007, a 6 per cent. rise compared with 3 years ago".
	Sadly, despite an awareness of those safety concerns, the road is the only viable option for most.
	The Highways Agency goes on to say:
	"The route is also vitally important to the regional economy in providing direct links to and between Swindon, Gloucester and Cheltenham, where there is significant development. It is therefore the most appropriate route for all traffic between these two centres".
	People certainly use the road; between 28,000 and 34,000 vehicles a day are forced to tackle this bottleneck. At the best of times, that can cause traffic jams as cars sit stationary with fumes pumping from their exhausts. Breakdowns can cause huge congestion problems, particularly as heavy goods vehicles often struggle up the steep incline at Crickley hill, in the constituency of my hon. Friend, break down and cause even more congestion as they do so.
	Since the problem has been highlighted, minor improvements have been made to the road. However, the fundamental fact is that 10 years of inactivity on the matter has seen four deaths, 31 serious injuries and 211 minor injuries, alongside countless hours lost to traffic jams and the sheer volume of carbon monoxide emissions from stationary vehicles.

Laurence Robertson: I congratulate my hon. Friend on, yet again, introducing this matter for debate. He will doubtless have noticed that the road, as it comes towards my constituency, does not clog up just at rush hour, as perhaps it once did; even in mid-afternoon it is not unusual to see a very long tailback. The inadequacy of the rail travel between here and my constituency, and between Cheltenham and Gloucester, makes the matter even worse. We do not have a good transport system to our constituencies.

Geoffrey Clifton-Brown: My hon. Friend makes a really good point. I believe that he made it in our previous debate in 2006. This really important road improvement is needed for the growth and prosperity not only of our region, but of the adjoining regions. As he says, it is not as if we have a really good rail system. Despite the size of Gloucester and Cheltenham, and their distance from London—less than 100 miles—we are talking about some of the worst rail transport in the country. This important piece of infrastructure needs to be completed.
	I have not been alone in my fight to get the necessary changes made; Gloucestershire county council has also been highly vocal on the matter. My hon. Friend will be aware that Peter Bungard, its chief executive, is sending an open letter to the Minister regarding this matter and the work done by the council as it has dragged on, and I hope the Minister will give that letter due attention.
	I am aware that a number of challenges are presented by this stretch of road. First, the A417 runs through the Cotswolds area of outstanding natural beauty, so any proposals need to be highly sensitive to mitigate the effects. I welcome the view of the Highways Agency in its excellent report that
	"this constraint must be fully considered in any proposed scheme".
	However, it must also be noted that the long tailbacks, to which my hon. Friend referred, do not contribute greatly to the beauty of the area.
	Secondly, the topography of the area is a challenge to road builders and makes the section at Nettleton Bottom and the Air Balloon so dangerous. Even with those considerations in mind, the Highways Agency has produced a preferred solution—still described as the brown route—that is almost identical in nature to the one it found in 2004. The cost, with inflation taken into account, is inevitably much the same. The Highways Agency states that the proposal is
	"highly developed and has captured virtually all the available savings for a major improvement giving long term service, reliability and resilience."
	I hope that when those in the south-west region consider their road schemes, they will acknowledge the amount of work that has been done and the fact that the Highways Agency has examined the matter in huge depth, has taken into account all local alternatives and has still come back with its preferred brown route, which is identical to the one that it came up with in 2004.
	In the Adjournment debate of 2006, I commented that the Highways Agency was uncomfortable with the road remaining a single lane. In response, the then Minister of State, the hon. Member for South Thanet, stated in respect of the status quo:
	"I have no hesitation in confirming that both it and the Government are uncomfortable."
	About the proposals that existed in 2004, he said:
	"For the first time, importantly, the Highways Agency had a major scheme design, and the Countryside Agency, the Environment Agency, English Nature and English Heritage were all content to see it proceed to the next stage: entry into the targeted programme of improvements.
	In my experience, it was probably the first time in national history that anyone had managed to get those four agencies to agree on such a sensitive matter".—[ Official Report, Westminster Hall, 11 October 2006; Vol. 450, c. 100-01WH.]
	That is surely of great importance, given the environmental concerns that were posited beforehand.
	I shall conclude on the facts of the case for the Minister. The A417 has an accident rate 30 per cent. higher than the national level. It is bedevilled by congestion and traffic levels are growing. Support for the improvements is widespread across the county and in neighbouring regions. Failure to begin improvements has made the Government uncomfortable, as was said in the previous debate. Five key agencies—I have just listed them—support the scheme. The road is a vital economic gateway nationally, regionally and locally. The solution proposed this year in the comprehensive review is similar to the one proposed in 2004. To my mind that is a clear indication that the best solution is now on the table, as proposed by the Highways Agency.
	I would like to leave this debate having received an assurance from the Minister that essential improvements to the missing link will begin in earnest. Perhaps the Minister can confirm that due consideration will be given to making it a national priority. For even beginning work tomorrow will be too late, because the scheme will take many years to complete. If correct prioritisation had been given, we could be well on the way to a solution. Too many people have died or been seriously injured, and the economic fortunes of the nation and the Gloucestershire region are being restricted by that 3.5 mile stretch of single road. I hope that the Minister will be able to give us some good news this evening.

Tom Harris: I congratulate the hon. Member for Cotswold (Mr. Clifton-Brown) on securing this second Adjournment debate in 18 months on what he refers to as the missing link on the A417 near Gloucester. I thank him for his constructive engagement with and his commitment to this campaign, which is important to his constituents and to the wider region. I will return to the issue of national importance later in my speech.
	Since the last Adjournment debate on this issue 18 months ago, the Highways Agency has undertaken a wide-ranging and thorough review of possible improvement options to address the existing conditions on the Cowley to Brockworth section of the A417. The report that I sent to the hon. Gentleman and his colleagues the hon. Members for Tewkesbury (Mr. Robertson) and for Forest of Dean (Mr. Harper) on 12 March details the work undertaken and conclusions reached during this review. The hon. Member for Cotswold alluded to that report.
	The review carried out by the Highways Agency has left no stone unturned in an effort to identify whether a more affordable option can be found to improve the existing conditions on this section of the A417. The hon. Gentleman will be aware that the views of key stakeholders have been an important part of the information gathering during the review. Indeed, I know that he gave his own helpful and supportive views personally to the Highways Agency as part of the value management stakeholder workshop in March 2007.
	The value management exercise was very useful. It enabled the agency to identify various options put forward by stakeholders that might contribute to a more affordable scheme and then rank them to establish which elements would be worth considering further. Each of the worthy options was then assessed to identify the impact that they would have on safety and journey time reliability, and then compared with the improvement achieved by the major scheme. This review has confirmed that the major scheme already developed by the Highways Agency would capture virtually all the available benefits, provide optimum value for money and be a long-term solution. As the hon. Gentleman rightly points out, following an extensive review we have returned to the original proposal.
	The hon. Gentleman pointed out the increase in costs of the major scheme. I know that he is acutely aware of the issue. It is why the region requested in 2005 that the Highways Agency carry out a review to examine the possibility of a lower cost solution. Since that last debate the costs have increased from £150 million to £250 million, and that rise is of such an order that it would be entirely appropriate to offer some explanation of why the figures have changed so much.
	There are three reasons. First, construction inflation has been far higher than was previously predicted. Secondly, a later date has been assumed for a possible start date. Thirdly, estimates include the historic costs spent on the scheme. As it turned out, construction inflation between 2001 and 2006 was higher than predicted and added some £50 million to the cost. In addition, delaying the scheme to beyond 2013 takes it through the construction period for the Olympics, when inflation is expected to be even higher. In fact, inflation for the period adds about £45 million to the cost. I understand that if a major construction scheme takes place at the same time as construction on the Olympics, resources and materials will be available only at a premium.
	The increases led us to look at other ways to reduce the cost of the major scheme. One would be to build the scheme in a number of phases, spreading the cost over a number of years. However, that would increase the costs by at least a further £30 million—13 per cent. of the total. It would also extend the period of construction, which would inevitably cause additional congestion during the construction phase. On balance, there is no doubt that it would be better to build the whole scheme under one contract.
	In a world of finite resources, we must ensure that our transport investment is focused on the most important schemes. That is why in July 2005 we invited the south-west region to give us advice on transport priorities with an indicative funding allocation for major schemes in the south-west. The regional funding allocation, or RFA, process has, for the first time, given regions a say in making decisions about transport schemes that affect them. The RFA process is an opportunity for people in the region to work together to develop a realistic, prioritised and affordable transport investment programme to support the region's high-level objectives for jobs, the economy, housing and the environment. It is central to our thinking that the regions are better placed than the men and women of Whitehall to advise decision makers on how transport can help to make the regions even better places.
	We backed the RFA process with massively increased investment funding. We have increased our annual spending on such schemes by 50 per cent. since 2001-02. For example, the Highways Agency has invested £16 million improving the Commonhead junction on the A419 in Swindon. The agency is also spending £65 million to provide a much-needed bypass for Blunsdon on the same route.
	We intend to provide almost £865 million over the next 10 years for regionally significant transport schemes in the south-west. However, the hon. Gentleman and others have suggested that we are not making enough money available in the south-west.
	I shall interrupt my flow at this point to reassure the hon. Gentleman and the hon. Member for Tewkesbury that I understand absolutely that when a constituency MP is dealing with the horrific aftermath and tragedy of people being killed on a local road it makes little difference, particularly to the families, for a Government Minister to talk about the record amounts of money being invested in road schemes elsewhere in that region. I am aware of the importance of providing safe roads in the region represented by the hon. Member for Cotswold and in other parts of the country. That does not detract from the fact that we are spending record amounts of money. I fully understand the hon. Gentleman's personal concerns about the accident record on that stretch of road, which are in no way obviated by the levels of investment.

Geoffrey Clifton-Brown: The Minister has alluded to the critical point in the debate. The regional priority system will not deliver the road because it is on the edge of three other regions. I have given the figures. It is very close to the edge: some 16 or 8 miles from the three other regions. The problem is that it benefits all four regions, but because of that fact the south-west region will not deliver it as a priority. Unless we get some national input from the Minister, the scheme will never be delivered. It is even more important to deliver it now that the two schemes to which he referred at Blunsdon and Commonhead have been delivered, as the whole road is now a dual carriageway except for the little bit in the middle—the 3.5 miles of single track. That makes it even more dangerous, because motorists get into the frame of mind of driving faster, having been on a dual carriageway section.

Tom Harris: I will come on to the issue of whether a road is identified as a road of national or regional importance in a few moments. It is sometimes implied—I know that this is not what the hon. Gentleman is suggesting—that if a road scheme is on the edge of a region and is close to other regions, and therefore evades the attention of the regional transport board, that is reason enough for it to become a road of national importance. As I am sure he will accept, the fact that a road is on the edge of a region is not enough in itself to make it a road of national importance, however important the road is to one or more regions.
	If the hon. Gentleman is suggesting that the Government should show leadership and give advice to regional transport boards on prioritisation, that is something that the Government can and will do. If he is suggesting that the Government should make available significantly more money than is already available through regional funding allocation, I will have to disappoint him. That was certainly the suggestion made when the prioritisation took place; some people claimed that there was no way that prioritisation could be given to the improvement of the Cowley to Brockworth section of the A417, given current spending commitments. I hear similar arguments from every region in relation to many other schemes, and that makes me think that we have been reasonably fair in dividing the pot among the regions.
	It could be argued that the regional pot should be bigger, but it would have to be made clear where the money would come from, whether from tax increases or from cutting investment somewhere else. Politicians in this place often go round in circles arguing about which scheme we should cut in order to promote another scheme. Unfortunately that is the truth of the argument, and the issue is not just one of party politics. When it comes to funding, there is a circle to be squared, and we have to be realistic. The Government do not have unlimited funds and sometimes tough choices have to be made. The RFA process helps us to make those choices in the best and most sensible way.
	Following the RFA's advice, the south-west region assigned funding to a total of 31 schemes in the period up to 2016, including three schemes in Gloucestershire —the Elmbridge integrated transport package, the Gloucester and Cheltenham park and ride and the Gloucester A40 improvements and widening. The region advised us that the Cowley to Brockworth improvement on the A417 may well prove to be a long-term priority, but will probably not come forward before 2016. I understand why the hon. Members for Cotswold and for Tewkesbury will be disappointed with the outcome, but we nevertheless accepted the region's advice. We will ask regions later this year to consider their priorities and tell us whether they have changed. The Highways Agency has already made its report available to the region so that it can take into account the benefits and value for money offered by options, including the lower cost options.

Geoffrey Clifton-Brown: Let me try just one more time. This is not an issue of funding, but of process. If a scheme is on the edge of four regions, and will benefit all four, no one region will give it priority. The scheme will never be delivered unless the Minister, working on a national basis, advises the four regions that all of them want the scheme. There must be a system of second preferences, as it were, otherwise the south-west region will never regard the road as a priority.

Tom Harris: The hon. Gentleman makes a perfectly valid point. However, I foresee a problem. If the south-west regional transport board does not see this particular road as a priority, what are the chances of other regions, through which this particular section of the A417 does not pass, giving a significant amount of their allocations to the upgrade of the road? If the south-west region will not prioritise it, I suggest to the hon. Gentleman, who knows the local political layout better than I, that it will be very difficult for the other three regions to which he has referred to put their hands in their pockets and surrender some of their own schemes for one that effectively lies outside their borders. However, I might be able to offer something positive to the hon. Gentleman in the one minute that I have left.
	If the hon. Gentleman, as a supporter of the scheme, does not like the priorities already drawn up by the regional transport board, he has the opportunity in the next few months to try to convince it of the evidence that the improvement should be higher on the region's list of priorities and that other schemes that currently have higher priority should be lower on that list. If the region wishes to change its priorities and include the improvement scheme or any of the lower-cost options in the RFA programme, we will be delighted to accept that advice, subject to the scheme meeting the Department for Transport's value for money criteria.
	The hon. Gentleman referred to the edge factor, mentioned by my predecessor, and made the point that the geographical position of the scheme may not have helped it within the RFA process. He is right; my predecessor did acknowledge the existence of the edge factor, which may have been an issue in some of the advice that we received from the regions. I do not consider that the edge factor is relevant in this case; if it had been, we would have expected other schemes in Gloucestershire not to have been prioritised. Clearly, that has not happened, as schemes in Gloucestershire have been prioritised.
	 The motion having been made after Ten o'clock, and the debate having continued for half an hour, Madam Deputy Speaker  adjourned the House without Question put, pursuant to the Standing Order.
	 Adjourned at one minute past Eleven o'clock.